VAT Returns

Need help with VAT returns? You’ve come to the right place. At SMH Chartered Accountants, we specialise in assisting businesses and individuals with their VAT Returns.

Our expert staff can:

  • Advise on the advantages and disadvantages of VAT Registration
  • Prepare and submit VAT returns
  • Advise on available VAT schemes
  • Provide updates on VAT changes
  • Liaise with HMRC to resolve complex VAT issues

If you want help with your HMRC VAT returns, contact us today at 0114 266 4432 or email your enquiry to [email protected].

However, if you want to learn more about VAT returns, keep reading this page. Here, you will learn exactly what VAT returns are, when to do them, how to file them, and how SMH Chartered Accountants can help you. Let’s get started:


What is a VAT return?

A VAT return is a form that tells HM Revenue and Customs (HMRC) how much Value-Added Tax you’ve charged to customers and paid to other businesses. 

It shows how much VAT you must pay HMRC. The payable amount is calculated by the VAT you’ve charged minus the VAT you’ve paid over a given period.

If you’ve paid more VAT than you’ve charged, HMRC will pay you back (more on this later).


When to do a VAT return

Usually, VAT returns are sent to HMRC every three months (four times a year). This period is known as an “accounting period.”

However, VAT returns can also be sent monthly or annually. Those registered for the Annual VAT Accounting Scheme only submit one yearly VAT return.

You only submit a VAT return if you’re registered for VAT. However, you must submit the return even if you have zero VAT to pay or reclaim. 


What Must be Included in a VAT Return

There are several things you must include on a VAT return, including:

  • Your total sales
  • Your total purchases
  • The amount of VAT you owe
  • The amount of VAT you can reclaim
  • The amount of VAT owed from HMRC if you’re reclaiming on business expenses.

It’s possible to use estimated figures on a VAT return, but you must ask HMRC for permission and have a good reason for why.

You must include VAT on the full value of what you sell. That means even if you receive goods or services instead of money or don’t pass on VAT to a customer. 


How to file your VAT return

There are several ways to file a VAT return.

  1. You can submit a VAT return online using accounting software compatible with Making Tax Digital.
  2. You can appoint an accountant or tax adviser like SMH Chartered Accountants to deal with HMRC on your behalf.
  3. File your VAT return online using your VAT online account or on paper (if you are exempt from Making Tax Digital).

If you submit a paper VAT return without being eligible, you could be charged a penalty by HMRC.


What if There Are Errors in Your HMRC VAT Return?

You may find at a later date there are errors in your HMRC VAT return.

The good news is that you can correct errors in your returns for the last four years. However, the value of the errors must be under a certain amount.

  1. If the NET value of errors is £10,000 or less.
  2. If the NET value of errors is between £10k and £50k but remains below 1% of the total sales value. 

You can calculate the NET value of errors by adding up the additional tax due and subtracting your due tax. Errors that fall under this threshold can be adjusted on the next VAT return due.

But for errors above this threshold or made deliberately,  you need to tell HMRC separately.


VAT Return Deadlines

The deadline for submitting a VAT return is usually one calendar month and seven days after the end of an accounting period.

However, this also includes the time for payment to reach HMRC’s account. Therefore, it’s important to give yourself enough time for payment to reach HMRC. Otherwise, you can face some penalties.


What Happens If You Miss the VAT Return Deadline?

Upon missing the VAT return deadline, HMRC will send a “VAT notice of assessment of tax.” This will tell you how much VAT they think you owe. 

You will then be given a penalty. The nature of the penalty will depend on if you submit your return late or make a late payment.

The new penalty system came into effect on 1 January 2023. Before this, those who submitted late returns or payments would be given a 12-month surcharge on top of the VAT owed. 


Submitting a Late VAT Return

Those submitting a late HMRC VAT return will be given a penalty point. Penalty points will build each time you submit a VAT return late. 

Once you reach the penalty point threshold, determined by when your accounting period ends, you will receive a £200 penalty. Every subsequent late submission will add a further £200 until you get rid of your penalty points by submitting returns on time.

Accounting Period Penalty Points Threshold
Annually 2
Quarterly 4
Monthly 5


Making a Late VAT Return Payment

You can be charged if your VAT return payment is late. The amount due will depend on how late you are, with penalty amounts rising after 16 days and then after 31 days.

There’s also late payment interest to pay, which is charged from the first-day payment is overdue. It’s calculated at the Bank of England base rate plus 2.5%.


How to Pay for Your VAT Bill

So, you’ve submitted your return. What next? Now it’s time to pay for your VAT bill.

VAT bills are paid to HMRC electronically, generally through Direct Debit or online banking. You must give yourself enough time for payment to reach HMRC’s account before the deadline.

Check out this government VAT payment deadline calculator to know how much time you should allow. 


What Happens if You Pay Too Little VAT?

If you fail to report or pay the right amount of VAT, you could be charged an interest of 6.75%. This is due if:

  • You report less VAT than you charge.
  • You reclaim more VAT than you pay.
  • HMRC finds you paid too little VAT after you pay.
  • You owe HMRC VAT after making a mistake on your VAT return.

This should be paid within 30 days. Failure to do so will result in further interest on the VAT due from the day of notice, which will rise up to two years.


VAT refunds: What happens if you pay too much VAT?

HMRC may make a mistake on your VAT return. If this happens, you could claim 3.25% interest if this mistake results in:

  • You paying too much VAT
  • You reclaiming too little VAT
  • HMRC delaying payment to you.

This interest is paid for the entire period from when the VAT was overpaid or reclaimed.

You should write to HMRC with details of your owed repayment and interest. This needs to be done within four years. 


VAT Returns Conclusion

We hope you’ve enjoyed our detailed guide to VAT returns. If you still need more information or want an experienced accountant to help, contact us today.

With over 25 years of experience, SMH Chartered Accountants has helped hundreds of individuals and businesses with their VAT returns each year. Get in touch today to see how we can help you.