How to submit your first VAT return

What is a VAT return?

Guide to paying your VAT

In this guide, I will explain the process of sending off your first VAT return, setting up a Making Tax Digital compliant bookkeeping system, entering your VAT transaction records, reviewing them and sending off your completed VAT return to HMRC.

When is your VAT return due?

Working out your VAT deadline

"The deadline for submitting your return online is usually one calendar month and 7 days after the end of an accounting period. This is also the deadline for paying HMRC. You need to allow time for the payment to reach HMRC’s account." - HMRC

You can check when your VAT period ends by logging into your VAT online account. This includes important information about your registration, access to your VAT registration certificate as well as your businesses VAT return dates & payment deadlines.

Set up a digital bookkeeping system

Use a Making Tax Digital bookkeeping system

You can use a HMRC approved digital bookkeeping system like Quickbooks to complete your bookkeeping and send your completed VAT return to HMRC. Input all of your sales invoices, credit notes and purchase invoices onto the system. Make sure to correctly code your VAT inputs, then the system should automatically calculate your VAT, including the numbers that will be displayed on each of the nine boxes on your return. Your accountant will be able to advise what can be claimed.

Using an approved bookkeeping software is a requirement which is also known as making tax digital. This refers to the complete digitisation of the tax system with the aim of mitigating mistakes which can occur by performing manual bookkeeping (including bookkeeping spreadsheets).

Completing your tax return

Activate VAT functionality & connect to HMRC

You'll need to activate the VAT functionality if you are using a bookkeeping system already for your accounting. When setting up your business using a bookkeeping system, you should be asked if you are VAT registered.

Once this has been done, you’ll should be able to set up your HMRC connection for MTD (Making Tax Digital) so that your bookkeeping system can send your completed VAT return directly to them.

Ensure that you show the VAT amount for all transactions recorded in your bookkeeping system from the date that you registered for VAT. To find this date, check out your VAT registration certificate in your .GOV business tax account.

Claim back VAT on expenses

You can claim back VAT on expenses that you have paid for in your business. Of course, you won't be able to claim VAT back on things that you’ve bought or used personally. However, if you have used something for business and personal reasons, you’ll be able to claim back VAT on the business portion.

Where a business buys goods or services before it registers for VAT, to support taxable business activities when it is registered, it can recover the tax provided that:

in the case of goods (either stock for resale or fixed assets), the goods remain on hand at the date of registration and will be used in the newly registered business. These goods must have been bought within 4 years.

in the case of services the supply was made not more than six months before the date of registration. Six months represents a period in which it is deemed that services obtained will relate to business activity carried on at the time of registration.

Viewing your completed VAT return

View your completed VAT return

Your bookkeeping system should automatically calculate your VAT return once you have submitted all of your VAT transactions and corresponding receipts. Make sure to enter any transaction records and numbers accurately so that you can relax knowing that your VAT return is correct.

Need to view your VAT return? Navigate to the VAT function which should be included in your bookkeeping system. You can then take a look at your completed VAT return for your VAT period. To be reassured that your completed VAT return is accurate and correct, you should be able to see an overview of your transaction before you submit the completed VAT return to HMRC.

Submitting your VAT return

Submit your VAT to HMRC

At this point, I would advise you to check over the numerical values which will be displayed in the 9 boxes on your VAT return. If you are happy with the VAT return, you can approve your bookkeeping systems to send your completed VAT return directly to HMRC on your behalf.

Enter your .GOV login details to link your bookkeeping system to your HMRC tax account. As soon as you are ready to submit your VAT return, go ahead and click the option to ‘Submit to HMRC’. Then your bookkeeping system should inform you that your VAT return was submitted with success. An email from HMRC should land in your registered email account confirming safe receipt of the VAT return.

Finally, you’ll then need to make sure you pay your VAT to HMRC.

References

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