The time frame for completing your VAT returns is referred to as your ‘accounting period’. These are usually due quarterly (every three months) – but we will see below how this changes according to the supplies you make.
Any business that makes VATable supplies must understand how to fulfil its VAT obligations, which includes filling out its VAT returns in a timely manner. The late submission of VAT returns, in addition to the late processing of payments due to HMRC as a result of these returns, could result in the application of penalties.
A VAT return is a taxpayer’s way of notifying His Majesty’s Revenue and Customs (HMRC) of the amount of VAT charged on supplies made in the relevant period in addition to the amount of VAT incurred in the course of making taxable supplies.
When do I have to submit VAT returns?
You must register for VAT if:
- your business’s total VAT taxable turnover over the last 12 months was over £85,000 (the VAT threshold); or
- you expect your business’s turnover to exceed £85,000 in the next 30 days alone.
You can also register voluntarily even if your taxable supply does not reach the £85,000 level. By registering for VAT, you can reclaim input VAT incurred while making VATable supplies.
Furthermore, you can register for VAT before beginning to make taxable deliveries in order to collect any input VAT on your start-up expenditures.
Submitting VAT returns
After you have registered for VAT, you must submit quarterly VAT returns to HMRC – even if you have no VAT to pay or refund (i.e. if these returns are nil).
Businesses that make zero-rating and receive regular VAT refunds may submit monthly returns as opposed to quarterly – this will assist from a cash flow perspective.
Furthermore, subject to certain conditions a business may join the annual accounting scheme, whereby a single VAT return is due for a calendar, although advanced payments are due throughout the year towards the business’s VAT bill – the value of these payments is based on the previous year’s liability.
Deadlines
The submission deadline for a VAT return is typically one calendar month plus seven days following the end of an accounting period. This is also the deadline for HMRC payments. For example, for periods ending March, the return and corresponding payment will likely be due no later than 7th May, You should allow enough time for the money to reach HMRC’s account, typically between three to six working days later, although this can vary, particularly where payment is being made from a non-UK bank account.
You can log in to your account on the government website, which allows you to:
- confirm when your VAT returns are due;
- know when your payment must clear HMRC’s account check and how to appeal penalties;
- set up an email reminder for your VAT return (if you utilise the VAT yearly accounting plan).
Understanding your business’s VAT obligations is vital to remain compliant, and will prevent incurring any penalty points or fines. What is more, you should know the ins and outs of your VAT responsibilities, to uncover ways in which you may save your business time and money. Speaking to VAT business professionals will allow you to tackle complicated issues with HMRC and VAT.
Author: Rob McCann, Director at The VAT People
