An Overview of VAT Returns
This blog gives the insight of VAT Returns and everything related to it. If you have landed here, do not stop and continue reading to know the important things about VAT Returns.
VAT Returns is usually submitted to HM Revenue and Customs (HMRC) in every 3 months which is known as your accounting period. The VAT Return records things including your total sales and purchases, the amount of VAT claims, amount of VAT refund from HMRC and the amount of VAT you owe for the accounting period. Even you have no Value Added Tax to pay or reclaims, you must submit a VAT Return. To make sure you submit VAT Return form, you can sign up to get a reminder when your return is due.
When you cancel your VAT registration, you have to send a final VAT using your VAT online account.
Claiming VAT Returns
VAT-registered businesses can usually reclaim the VAT paid on business purchases and expenses but cannot on the entertainment expenses. However, you need to have the financial records to support your claim.
You can reclaim the Value Added Tax you’ve paid HMRC but not received from a customer. To meet the criteria for reclaiming VAT, the debt must be between 6 months and 4 years and 6 months old, the debt must not be sold and not charged more than the price for the item.
For submitting VAT Return online, you need a VAT number and a VAT online account. With the HMRC’s free online service or commercial software, you can then submit the VAT Return. You can take help from an accountant for submitting it
. However, you need to authorise them first.
From your online account, you will know when your VAT Return are due and HMRC payment deadlines. The deadline for submitting the return online and paying HMRC is 1 calendar month and 7 days after accounting period ends. You must pay through direct debit or internet banking. IT will take some time to for the payment to reach HMRC’s account,so you need to allow some time.
About Surcharges & Penalties
If HMRC do not receive your return and payments by the deadline, they will record a default and you will enter a 12 month surcharge period. The surcharge is a percentage of the VAT outstanding on the due date for the accounting period in default. The rate increases every time in a surcharge period in case of default.
Apart from surcharges, HMRC can charge you a penalty of up to 100% of any tax under-stated or over-claimed if the return is inaccurate, 30% of an assessment if HMRC sends you a low one and you do not inform it’s wrong within 30 days and £400 if you submit a paper VAT Return unless HMRC has told you you’re free from from submitting your return online.
You will also receive a VAT notice of assessment of tax from HMRC if you fail to send your return and pay on time. In case if you don’t pay right amount of VAT, HMRC may charge you interest. However, you can claim interest in case you have overpaid your VAT.