What is a VAT return?
A VAT return is the calculation of the amount of VAT due on sales you have made subtracted by the amount of VAT reclaimable on purchases. The result is the amount payable to HMRC.
If the amount reclaimable on purchases is more than the amount due on sales, HMRC will give you the difference back!
Put into other words:
A VAT Return calculates how much VAT you owe HMRC (or how much they owe you) by looking at:
- Total sales and purchases across a three-month accounting period
- The amount of VAT you owe for sales
- The amount of VAT you can reclaim for purchases made by your business.
All VAT-registered businesses must submit VAT Returns – even if there is no VAT to pay or reclaim. Businesses that are not VAT registered do not need to submit VAT Returns.
How to file your VAT return
You can file your VAT return through HMRC’s own website, come to us and we can help you do this, find out more here or can use an online accounting service like FreeAgent which will help you fill in your VAT return, then allow you to submit it directly to HMRC for you.
Example of a VAT return
VAT Return refunds
If your VAT Return shows that you can reclaim more VAT than the amount you owe, HMRC will refund the difference.
VAT repayments are usually approved within 30 days of HMRC receiving your VAT Return. If HMRC has your bank details, the refund will go directly to your bank account. If not, you will be sent a cheque.
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VAT stands for Value Added tax, and the companies that have registered for VAT with HMRC are liable to pay VAT. The condition to register for VAT is based on threshold set by the HMRC. If your taxable income exceeds £85,000 in thirty days period, then it is compulsory for you to register for VAT. You can also register voluntarily if you are sure that your income in the next 30 days period will exceed £85,000. The VAT return can be based on monthly, quarterly, or annual schedule. VAT includes the input which is the sales and output which is expenditure. The comparison of input and output value is the VAT that is payable.
Professional VAT Accountants
As VAT accountants we offer tailored solutions that meet your business needs, whether public or private. We can help save time while meeting tax requirements efficiently while ensuring you don’t pay any unnecessary taxes.
VAT is the tax you must pay when purchasing goods or services. However, if your company has a turnover of more than £85,000, you will be required to register for and collect VAT on products. In that case, retailers can buy from VAT registered companies and charge customers a reasonable amount. However, there are specific rules to follow once registered each quarter; otherwise, penalties could be applied.
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