What to Look Out For?
Your VAT return is a summary of all sales and purchases relating to your business and the VAT attributed to them. The return will include your sales total – excluding VAT – and output tax, which is the VAT you charged on these sales. It is the output tax that you have to pay to HMRC and includes all other taxable transactions, such as that used for personal use.
When it comes to any imports from countries within the European Union (EU) to your company, these must also be recorded on your VAT return although if you are based in the UK you can reclaim VAT on these imports in the majority of cases.
You must submit all VAT returns online, registering with HMRC VAT Online to use the tools provided in order to upload your company’s return. An accountant can also file a VAT return on your behalf.
Tax Points, VAT Periods and Returns
In general VAT periods are for each quarter and UK Vat registered companies must complete and submit a return to HMRC for each period.
There are exceptions and some companies can ask for a non-standard VAT period should they regularly reclaim VAT from HMRC. These companies can boost their cash flow by completing monthly returns. Other companies may request quarterly periods that match their financial years; whilst smaller business can make things simple and opt for the annual VAT accounting scheme.
The different approaches to VAT periods allows a flexibility that start-up businesses will appreciate and gives them ample opportunity to grow and focus on other aspects of their business.
A VAT return will detail every transaction during a VAT period and the transaction date is determined by the tax point. A tax point is usually the date shown on the VAT invoice but there are a few alternatives, such as:
- The date of supply – this is the case if there is no VAT invoice as with typical retail sales, or in cases where the VAT invoice is issued more than 14 days after the date of supply
- The earlier of payment date and invoice date – when payment is made in advance
- The date of supply – this is also the case if the VAT invoice was issued more than 14 days after the date of supply
VAT returns are due one month and seven days, through online submission, after the Vat period has ended. At this point you are expected to make payment of any VAT you owe, although you can make payment through direct debit three days after this date.
There are also special tax point rules for a number of other situations, including part payments and for certain specific industries.
Don’t Let VAT Become too Taxing
All information about Vat returns can be found through HMRC website or by seeking the advice of business start-up specialists who can advise you on all aspects of your business operations, from business plans, financing, employment rights and marketing your business.
We have a range of articles related to helping start-up and small businesses. From business ideas to funding and how to market your business there is something to help you at each and every step on the business ladder.
Our Free Download section is also full of templates which will help you get started.