VAT Return – What is a VAT Return?

A VAT Return calculates how much VAT a company should pay to or be reimbursed by HM Revenue and Customs (HMRC).

Learn how to fill out a VAT report.

A VAT Return calculates how much VAT you owe HMRC (or how much they owe you) by looking at:

  • Your total sales and purchases across a three-month accounting period

  • The amount of VAT you owe for sales

  • The amount of VAT you can reclaim for purchases made by your business

All VAT-registered businesses must submit VAT Returns – even if there’s no VAT to pay or reclaim. Businesses that aren’t VAT registered don’t need to submit VAT Returns.

How to submit a VAT Return

HMRC’s Making Tax Digital for VAT Scheme came into effect on April 1st, 2019. It required VAT Returns to be submitted via authorised, HMRC-approved Making Tax Digital software.

All businesses with a taxable turnover of more than £85,000 are required to register for VAT. If your business isn’t required to register for VAT but opts in voluntarily, you don’t currently need to comply with Making Tax Digital (until April 2022). Instead, you can continue to manually submit VAT Returns online.

The VAT Return due date is 1 calendar month and 7 days after the end of your accounting period.

How often should I submit a VAT Return?

The majority of businesses will submit four VAT Returns per year, one at the end of every financial quarter.

Businesses registered for the Annual VAT Accounting Scheme will only need to submit one VAT Return per year. The scheme is available for VAT-registered businesses that have an estimated taxable turnover of less than £1.35 million.

Paying your VAT bill

If your VAT Return indicates that you owe more VAT than you’re able to reclaim, you’ll need to pay the difference to HMRC. There are many different options for paying your VAT bill including direct debit, online credit or debit card payment and standing order.

If you owe HMRC money, you have a limited time to pay your outstanding VAT bill. The deadline is the same date by which you must submit your VAT Return (1 calendar month and 7 days after the end of your account period). You should allow enough time for your payments to reach HMRC.

VAT Return refunds

If your VAT Return shows that you can reclaim more VAT than the amount you owe, HMRC will refund the difference.

VAT repayments are usually approved within 30 days of HMRC receiving your VAT Return. If HMRC has your bank details, the refund will go directly to your bank account. If not, you’ll be sent a cheque.