VAT Returns

Your VAT calculated correctly, reported on time, and fully compliant with Making Tax Digital.

If your business is VAT registered, you need to file VAT returns — usually quarterly. You must register for VAT if your taxable turnover exceeds £90,000 in any rolling 12-month period.

Mandatory VAT registration:

• Turnover exceeds £90,000 in any 12-month period
• You expect to exceed the threshold in the next 30 days alone

Voluntary VAT registration:

You can register voluntarily below the threshold. This lets you reclaim VAT on business purchases, which can be worthwhile if you buy from VAT-registered suppliers or want to appear more established to clients.

What counts as taxable turnover for VAT?

It’s the total value of everything you sell that isn’t VAT exempt — not your profit, and not necessarily your total sales. Some businesses have both VATable and non-VATable income, which can make the calculation less straightforward.

VAT returns report the VAT you’ve charged on sales (output VAT) and the VAT you’ve paid on purchases (input VAT). The difference is what you owe HMRC — or what they owe you.

Each return involves:

• Reconciling your VAT transactions — checking everything is correctly categorised
• Accounting for accruals and prepayments — making sure timing is correct
• Identifying late or missing items — catching anything that’s slipped through
• Calculating your VAT liability — what you owe or are owed
• Submitting to HMRC — via MTD-compliant software

VAT rates:

• 20% — standard rate (most goods and services)
• 5% — reduced rate (some energy, children’s car seats, etc.)
• 0% — zero-rated (children’s clothes, most food, books)

Some items are exempt from VAT entirely — they’re not zero-rated, they’re outside the VAT system altogether.

Most businesses file quarterly, and the deadline is one calendar month and seven days after the end of each VAT period.

For example, if your VAT quarter ends on 31 March, your return and payment are due by 7 May.

VAT filing frequency options

• Quarterly — this is the most common
• Monthly — quite useful if you regularly reclaim VAT
• Annually — available through the Annual Accounting Scheme

What happens if you’re late?

HMRC operates a points-based penalty system for late VAT returns. Late submissions accumulate points, and once you hit the threshold, you’ll receive a fine. Late payments also incur interest and may trigger additional fines, so it’s important you always save your VAT so you’re ready to pay it quickly.

1. Reconciling your transactions — checking VAT has been applied correctly throughout the period
2. Accounting for any adjustments — accruals, prepayments, corrections from previous periods
3. Identifying any issues — missing invoices, incorrect VAT treatment, late entries
4. Sending you a draft for approval — you review the figures before submission
5. Submission to HMRC — via MTD-compliant software
6. We confirm what you owe — with bank details, amount, and payment deadline

Making Tax Digital

All VAT-registered businesses must now keep digital records and submit returns using MTD-compliant software. If you’re currently using spreadsheets, we can help you transition to accounting software that meets the new requirements.

Although VAT returns can be prepared and submitted by anyone in your business who has access to your accounting software and your VAT details, it’s worth considering working with an expert to reduce the risk of errors and delays.

Ensuring VAT accuracy and compliance

VAT rules are detailed, and mistakes can be costly. We make sure transactions are correctly categorised so your return is accurate. Additionally, MTD requirements mean you need the right software and processes. We handle that for you.

Handling complex VAT transactions

International sales, mixed VAT rates, partial exemption — these scenarios need careful handling, and the rules change depending on your industry. This is when it really helps to have support from accountants experienced with complex VAT situations!