💼 VAT RETURNS: What Every UK Business Owner Needs to Know (Without the Headache!) 💼
Let’s be honest, filing your VAT return probably isn’t your favourite part of running a business. But it’s a BIG deal.
✅ Do it right = stay compliant + keep more of your hard-earned money.
❌ Get it wrong = overpaying tax or getting stung by HMRC fines.
If VAT makes your head spin, don’t panic, you’re not alone! This post breaks it down in simple steps. No jargon. No stress.
👇 What Is a VAT Return?
If you're VAT-registered (either because you have to be or by choice), you're required to submit a VAT Return, usually every 3 months.
This return tells HMRC:
🔹 How much VAT you’ve charged your customers (output VAT)
🔹 How much VAT you’ve paid on business expenses (input VAT)
The difference? That’s what you either pay to HMRC or claim back.
💡 If you've spent more VAT than you've collected, you could be owed a refund!
👀 Do I Need to Submit a VAT Return?
You must submit VAT returns if:
✔️ Your turnover is above the £90,000 VAT threshold
✔️ You voluntarily registered for VAT
✔️ You use a VAT scheme like Flat Rate, Standard Rate, or Cash Accounting
✔️ Even if you made no sales = submit a nil return
🧾 What Do I Need Before I File?
Start by collecting:
📄 Sales invoices (to see how much VAT you charged)
📄 Purchase receipts & supplier invoices (for VAT you paid)
📄 Bank statements (to cross-check payments)
Pro tip 💡: Use accounting software like Xero, QuickBooks, or FreeAgent to automate the process and reduce human error!
🧮 How Do I Calculate My VAT?
Let’s keep it simple:
VAT due = Output VAT – Input VAT
Example:
🧾 Total sales: £20,000 + VAT (£4,000) = £24,000
💸 Business expenses: £10,000 + VAT (£2,000) = £12,000
👉 You collected £4,000 in VAT from your customers (output VAT).
👉 You paid £2,000 in VAT on business costs (input VAT).
BUT:
If input VAT is higher than output VAT, you may get money back!
💻 How Do I Submit My VAT Return?
Since Making Tax Digital (MTD) came into effect, all VAT-registered businesses must submit VAT returns online.
✅ Either use MTD-compatible software (like Xero or QuickBooks)
OR
✅ Use HMRC’s VAT online services portal
Steps:
Log in to your HMRC VAT account
Input VAT figures (or let your software do it)
Double-check everything
Submit & download a confirmation receipt
💡 Always triple, check errors can lead to penalties.
📅 VAT Return Deadlines You Can’t Miss
Your VAT return AND any payment must be submitted by the 7th of the second month after the quarter ends.
🛎 Set calendar reminders or automate it through software!
🚨 5 Common VAT Mistakes (And How to Avoid Them)
1️⃣ Forgetting to claim VAT on expenses
➡️ Solution: Keep ALL receipts and upload them to your software.
2️⃣ Missing the deadline
➡️ Solution: Set digital calendar alerts or work with an accountant.
3️⃣ Wrong VAT scheme
➡️ Solution: The Flat Rate Scheme or Cash Accounting could save you time or money—ask an expert what’s best for your business.
4️⃣ Misreporting figures
➡️ Solution: Reconcile your accounts regularly and use proper tools.
5️⃣ Overpaying or underpaying VAT
➡️ Solution: Check your return thoroughly before you click submit!
As a family-run company, we pride ourselves on providing a bespoke service tailored to your particular needs.
Above all, our objective is to save you time, money and effort in managing your accounts, leaving you free to focus on building your business.
Remember, you’re not alone, we’re always here to help if you have an accounts problem or query.
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