VAT return

Make sure you’re on the right VAT scheme and don’t pay any more VAT than you need to.

We calculate your VAT return and submit it to HMRC for you

If your business turns over £85,000 a year or more, you need to be registered for VAT and you need to make your VAT submissions to HMRC via the more complex Making Tax Digital system.

Are you concerned that you should be registered for VAT but you’re not? You need to register as soon as it appears that the momentum of your turnover means that, in the next 12 months, you’ll surpass the £85,000 limit. Send us your log-ins to Xero and we’ll let you know straight away whether you need to register.

Did you know that, if your turnover is less than £1.35m per year, you can switch to a different system which means that you’ll only become liable for the VAT you’ve actually been paid on invoices rather than when you issued the invoice in the first place?

Whether you need to register or you are already registered, we’ll let you know which VAT system is the system most advantageous for your business to be on and, as your official tax agent, we’ll arrange everything with HMRC on your behalf.

If you have a pending VAT bill but you need help to get your books up to HMRC’s standard to calculate it correctly, please get in touch with us. We’ll be able to tell you exactly what you owe so you won’t overpay or underpay and so you won’t be fined for late submission.

The Business Bookkeeper has worked with many businesses from large to small in the decade since we first started trading. We’re experienced, friendly, and approachable bookkeepers.

To find out more about our VAT bookkeeping service, please call us on 020 3137 6565 or send us a message.

A young woman smiling whilst working on her laptop

VAT Check

We’ll check whether you should be registered for VAT and on which scheme. If you are already registered for VAT, are you on the system most optimal for your business? If not, we’ll advice you on the alternatives and, as your registered tax agent, make the necessary change at HMRC on your behalf.

Keep up to date

You need to keep up-to-date financial records to ensure that you’re paying the right amount of VAT. HMRC expects your business to produce accounts to a particular standard and we make sure that you do. And, by doing that, you’ll be certain that you’re paying no more nor no less than you should be in VAT.

Submit

VAT is now part of the more complicated Making Tax Digital system. The returns you have to submit to HMRC via the Making Tax Digital system are far more detailed than ever before. With the Business Bookkeeper, every VAT submission will be made on time and to the level of detail HMRC expects.

Frequently Asked Questions

VAT returns

A VAT return form is an electronic form on the Making Tax Digital system on which you submit all details of invoices you’ve issued and received which bore VAT – this is an online VAT return. On the cash accounting system, you submit all details of actual payments made to and from the account which bore VAT.

With VAT, there is output VAT (the VAT you charge on your sales and invoices) and input VAT (the VAT you’re charged by your suppliers on their sales and invoices to you).

To calculate your VAT return and payment/refund, you need to add up all of the input VAT you’ve paid and subtract it from all of the output VAT you’ve charged. Depending on the system you’re on, if you’ve invoiced or paid more in input VAT than you’ve invoiced or been paid in output VAT, HMRC will refund you.

On the standard VAT scheme, you charge 20% in VAT on top of the invoices you issue. If your suppliers are VAT registered, they charge you 20% in VAT on top of the invoices they send you.

The standard VAT period is three months. After the end of the three month period, this is how you work out your VAT return date. You then must submit your VAT return and pay what VAT you owe (or are refunded what HMRC owes you) by the 7th of the following month at the end of your quarter (for example, if your quarter is 1st January to 31st March, you have until 7th May to submit your return and make payment).

Your quarterly VAT return dates depend on the month in which you registered for VAT.

You can choose to make monthly VAT returns which many do because it’s easier to manage cash flow this way particularly if they are expecting refunds however this tends to be restricted to companies which pay more than £2.3m a year in VAT.

The cash accounting system is identical to the standard VAT scheme except that you only pay VAT on payments which have actually reached your bank account rather than on issues you’ve invoiced regardless of whether your client has paid them or not.

The cash accounting scheme is available for companies whose turnover does not exceed £1.35m.

What is the flat rate VAT scheme? On the flat rate VAT scheme, you still charge VAT to clients but what you pay to HMRC is a percentage of your invoices based on your line of business. 


How to calculate a flat rate VAT return is different. For example, the flat rate VAT rate for advertising agencies is 11% so, if you issued an invoice for £2,000 + VAT equalling £2,400, you would hold back 11% of that payment to make to HMRC (£264). You can’t claim input VAT except on certain assets over £2,000.

If your business turns over less than £1,350,000, you can apply for annual VAT accounting under which you submit one VAT return a year (based on your previous year’s turnover or an estimate of coming turnover if your business is new) and then make payments of 10% of the annual VAT bills in 4, 5, 6, 7, 8, 9, 10, 11, and 12 if you pay monthly or 25% if you pay quarterly (in months 4, 7, and 10).

If the amount of VAT you owe differs from the agreed amount, you will either pay HMRC the difference or they will pay you the difference.