Introduction
Submitting a VAT return online is a crucial responsibility for VAT-registered businesses in the UK. With the introduction of Making Tax Digital (MTD), businesses are required to file their VAT returns electronically using HMRC-approved software. This guide will take you through the VAT return process, ensuring compliance and avoiding penalties.
Understanding VAT Returns
VAT returns summarize the VAT charged on sales (output VAT) and VAT paid on purchases (input VAT). The difference between these determines whether a business owes VAT to HMRC or is due for a refund. Most businesses file VAT returns quarterly, though some may opt for annual submissions.
Prerequisites for Online VAT Submission
Before you submit your VAT return online, ensure that:
Your business is VAT-registered.
You have MTD-compatible software (like QuickBooks, Xero, or Sage).
You maintain digital VAT records.
You have an HMRC Government Gateway account.
Step-by-Step Guide to Submitting VAT Returns Online
Step 1: Sign in to HMRC’s Online Services
To begin, log in to your HMRC Government Gateway account with your credentials. If you do not have an account, you must create one.
Step 2: Link Your VAT Number
After logging in, navigate to the VAT section and enter your VAT registration number to link it to your account.
Step 3: Use MTD-Approved Software
Since Making Tax Digital (MTD) is now mandatory, you must use MTD-compliant software to record transactions and submit returns. Some popular options include:
QuickBooks
Xero
Sage Accounting
FreeAgent
Zoho Books
Step 4: Input Your VAT Return Data
Your accounting software will automatically calculate your VAT liability based on your recorded transactions. Ensure that:
Sales VAT (output VAT) is recorded correctly.
Purchase VAT (input VAT) is accurately claimed.
All business expenses are properly categorized.
Step 5: Review and Confirm Your VAT Return
Before submitting, carefully review the VAT return summary. Double-check the figures, as incorrect submissions can lead to HMRC penalties.
Step 6: Submit the VAT Return
Once verified, submit your VAT return through your accounting software. You will receive a confirmation from HMRC once the return is successfully filed.
Step 7: Make a VAT Payment (If Applicable)
If you owe VAT to HMRC, make the payment before the deadline via:
Direct Debit (Recommended)
Bank Transfer (BACS or CHAPS)
Debit/Credit Card
Common VAT Submission Mistakes to Avoid
Missing VAT return deadlines (penalties apply for late submissions)
Inaccurate VAT calculations
Failing to use MTD-compliant software
Claiming VAT on non-deductible expenses
Deadlines for VAT Submission
VAT returns are usually due one month and seven days after the end of the VAT period. Late submissions result in penalties and interest charges.
Conclusion
Submitting your VAT return online ensures compliance and avoids unnecessary penalties. By following the correct process and using MTD-approved software, businesses can simplify their VAT obligations and maintain financial accuracy.
📌 Next Step: Learn about common VAT submission mistakes and how to avoid them in our detailed guide: Common Mistakes to Avoid in VAT Submission.
