- United Kingdom
A VAT return is a form or a document, which you submit to HMRC. Businesses who are registered for Value Added Tax (VAT) submit it. It shows how much VAT is charged on sales as well as how much VAT is paid on purchases to other VAT- registered businesses.
In addition, VAT is submitted to HMRC, usually quarterly by the businesses that are registered for VAT. The VAT Returns helps HMRC to calculate whether your business is eligible for a VAT return or needs to pay the difference to HMRC. This process helps in maintaining transparency and ensures that the businesses collect VAT and report it to HMRC appropriately.
Submission of VAT Returns play a key role in maintaining the fairness and transparency of tax systems. It guarantees that the companies pay the right amount to HMRC and accurately charge VAT to clients.
The important financial details which should be included in VAT are;
Businesses who are VAT-registered are required to maintain their VAT records online and submit their returns through HMRC-approved softwares such as QuickBooks, Xero, Sage. Most businesses no longer accept manual or paper submissions. Non-compliance with MTD regulations may result in interest charges and penalties.
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Our certified Accountants ensure correct filing and error-free submissions before deadlines to avoid any penalties later.
We walk you through the ideal VAT plan for your company. Our staff makes sure you don't miss out on important input claims or overpay VAT.
MTD is no more hassle when we're here. We comply with HMRC's MTD requirements. To keep you fully compliant, our system ensures secure and seamless filing.
Made a mistake in previous return or received notice from HMRC? No need to worry. We guide you through any VAT-related challenges offering your expert guidance.
Calculating VAT Returns is a simple process. You can calculate VAT Returns by subtracting the VAT you’ve paid on purchases (Input VAT) from the VAT you’ve charged on sales (Output VAT). The resulting amount is payable to HMRC. Moreover, if the VAT you’ve paid on purchases is more than the VAT which is charged on sales, HMRC will give you back the difference amount.
VAT Returns Formula:
VAT Payable or Refund = Output VAT – Input VAT
Where;
Output VAT= Value Added Tax (VAT) you charge on sales
Input VAT= Value Added Tax (VAT) you paid on purchases and business expenses.
When you’re selling products or services, you are required to add the correct amount of Value Added Tax (VAT) to the price and show it clearly on any receipt or invoice which you give to your customer.
Three main VAT rates in UK are;
It is the standard and most common rate that is applied to most goods and services that are sold by businesses.
There are some items that are taxed below 5%. For checking if your product qualifies for this rate, you should check the VAT’s guide that is given by the government.
Some goods and services are zero-rated which means that you don’t have to charge any VAT on them.
VAT Returns are required if your taxable turnover is above the threshold, that is currently £90,000 in 2025. The threshold is the total amount of taxable turnover that a business can earn in a year from the sale of taxable goods or services. You should pay VAT Returns if you have registered for VAT and your turnover goes over this limit.
However, if your turnover is below threshold, the VAT registration is optional and you can choose to register voluntarily. Many small firms decide to voluntarily register for VAT so that they can appear more credible to their customers or claim VAT on their business expenses.
Most commonly, VAT Returns are filed by a wide range of businesses and self-employed individuals. This includes;
IT professionals, writers, designers, and other individuals who offer their services directly to clients may charge VAT on their invoices.
All VAT-registered businesses must submit VAT Returns accurately and stay compliant whether they are operating locally or nationwide.
Individual business owners who operate under their own names may choose to register voluntarily for VAT to reclaim input VAT or meet the expectations of their clients.
Online sellers who run their e-commerce stores on different platforms like Amazon, Shopify, Etsy, eBay etc, often register and file VAT Returns due to the high volumes of transactions.
Contractors especially those in the construction or IT fields often work on project basis and issue invoices that include VAT.
Professionals in fields including marketing, HR, finance, and consulting provide VATable services and charge VAT to clients.
Salons, cafes, shops, and other retail-based businesses regularly charge VAT on goods and services they provide to customers.
Choose CannyTax today and ensure that your VAT Returns are filed quickly without any errors.
You can face financial penalties if the VAT Returns deadline is missed. We help you track return deadlines and send you reminders on time so that your returns are submitted timely.
Application of the wrong VAT scheme affects your cash flow and leads to inaccurate filings. At our firm, we fully evaluate your business model and apply the most suitable scheme which is tailored to your business.
One of the most common mistakes when categorising transactions is the use of incorrect VAT codes. A wrong VAT code can affect how much VAT you owe and how much you can get back.
Making Tax Digital is now mandatory for businesses who are VAT-registered. You could have penalties and non-compliance if your systems aren't compliant with HMRC.
We start by reviewing your bookkeeping to make sure that your invoices, sales, and costs are accurately categorised and recorded.
In order to ensure accuracy and compliance, we cross-check entries and calculate your VAT liability.
We use secure and MTD-compliant software to file your VAT Returns and provide you a copy for your records.
We notify you with HMRC confirmation after filing and maintain updated records for upcoming returns or audits.
VAT returns are filed quarterly. After the end of your accounting period, you have one month and 7 days to file your return and make your payment.
Yes, our expert team helps you with VAT registration guiding you through all the paperwork and scheme selection.
You can get a penalty if you pay late. The amount of penalty depends on how late you pay and it increases after 16 days and then after 31 days.
Yes, if you're below threshold but voluntarily registered, you can reclaim VAT.
