Who needs to submit a VAT return?
Any business, whether you’re a sole trader, a limited company, or something else, must register for VAT once turnover reaches the registration threshold.
Once you register, you must make regular VAT submissions to tell HMRC about the VAT you charge on sales to customers, or that you pay to other VAT-registered businesses.
VAT registration is compulsory once your VAT-taxable business turnover reaches the registration threshold in any 12-month period. VAT-taxable turnover means the total amount of sales that you make in any 12-month period, which are not exempt from VAT.
Can I register for VAT before the threshold?
Yes, you can register for VAT early, and this can sometimes be useful for a business. For example, if you want to make sure you complete your registration in enough time, or if your business regularly pays more VAT to other businesses than it collects from customers.
When this happens, registering for VAT voluntarily can be more tax-efficient, because you’ll be able to reclaim the VAT on your VAT return.
How do I submit a VAT return?
The introduction of Making Tax Digital rules for VAT means you must keep digital tax records, and submit this information to HMRC using approved software or bridging software. Depending on what type of VAT scheme you’re on, you’ll either need to make submissions monthly, quarterly, or annually.
What sort of information will a VAT return include?
The VAT submissions you make to HMRC will show the total sales and purchases you make, as well as the amount of VAT that is included. You’ll need to include information about which rate of VAT you have charged or paid on each transaction.
How do I pay or reclaim VAT?
Once you make a VAT submission, HMRC will calculate your VAT bill, or work out how much you can reclaim.
If you collect more on sales than you pay to other businesses, you’ll need to pay the difference between the two amounts to HMRC.
If you pay more to other businesses than you collect on sales, you can reclaim the difference between the two from HMRC.
Can an accountant help me with VAT?
While some businesses choose to complete their own VAT returns, it can be a very complex area, with a huge number of rules, regulations, and rates to keep on top of.
Easy-to-use bookkeeping software can make the process of recording and reporting VAT much easier, or you might decide to outsource it to a good accountant.
