VAT returns

Details of VAT to be charged to customers and payable by HM Revenue & Customs (HMRC) are included in the VAT return. UK VAT registered businesses must return VAT and pay VAT to HMRC

Basic principles of VAT return

The sales tax return summarizes your sales and purchases and the corresponding sales tax. All the information you need should be on your sales tax file.

The sales tax return will include your total sales (excluding sales tax) and the production tax, the sales tax you collect on those sales and must be paid to HMRC. This includes VAT payable on other taxable transactions, such as when you exchange goods or use them for personal purposes.

The VAT return also includes the details of all your purchases (excluding VAT) and the input tax, the VAT that you have paid and that you can claim. Typically, when you make sales exempt from VAT, you cannot claim all of the VAT you paid. Other purchases that you normally can't charge VAT for include most car purchases. If you don't have a VAT invoice that shows you paid, you can't claim sales tax.

A summary of trade with other European Union (EU) countries must also be included in the VAT return. Businesses in the UK can generally charge VAT on EU imports, but VAT is calculated and recorded differently.

VAT return s must be submitted online. Unless your accountant has informed you of your VAT return, you must register for HMRC VAT online and use its appropriate software or commercial software.

As of April 1, 2019, companies selling above the VAT registration threshold must meet HMRC's “tax digitization” requirements. VAT return s are submitted using MTD compatible software.

As of April 2016, all small businesses in the UK have an online personal tax account. You can view your tax transactions across the full spectrum of corporate taxes, including self-assessment, corporate tax, VAT, and PAYE for employers, and pay whenever you want.

Tax points, VAT periods and VAT returns

UK VAT registered businesses will return VAT for each VAT period. Sales tax periods are typically quarterly, but you can request a non-standard sales tax period. For example, a business that regularly collects sales tax from HM Revenue & Customs can increase its cash flow by completing monthly sales tax returns. UK businesses can also claim quarterly sales tax periods that fall within their fiscal year. Small businesses can simplify VAT calculations by choosing an annual floor plan.

Your sales tax return summarizes all of the transactions that took place during that sales tax period. For VAT purposes, the date of the transaction is determined by the “tax point”. The tax point is usually, but not always, the date of the sales tax invoice. However, if:

• There is no invoice with VAT (eg typical retail sales). The checkpoint is usually the delivery date

• Payment is made in advance. The tax score is the first point between the payment date and the invoice date

• The invoice with VAT is issued 14 days after the delivery date. Checkpoint is the delivery date

Some industries have special tax score rules for situations such as partial payments and for certain sales tax accounting systems. You may want to seek advice to make sure you understand what tax item should appear on your sales tax invoices and what should appear on your sales tax return.

Online VAT returns must be made one month and seven days after the end of the VAT period. The VAT due must be paid at the same time, but HMRC will collect the payments three days later by direct debit. You can calculate the VAT payment deadline using the GOV.UK calculator.

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