By Rob McCann, Director at The VAT People
The time frame for completing your VAT returns is known as the ‘accounting period’. This is typically every three months, but here we will outline how this can vary depending on a number of factors.
Any business making VATable supplies must understand how to fulfill its VAT obligations, which include the timely filing of VAT returns. The late submission of VAT returns, in addition to the late processing of payments due to HMRC as a result of these returns, could result in the application of penalties.
A VAT return is a taxpayer’s way of notifying His Majesty’s Revenue and Customs (HMRC) of the amount of VAT charged on supplies made in the relevant period, in addition to the amount of VAT incurred in the course of making taxable supplies.
When Do I Have To Submit My VAT Returns?
You must register for VAT if your business’s taxable turnover in the previous 12 months exceeds the VAT registration threshold of £85,000, or if you expect your business’s turnover to surpass £85,000 in the next 30 days alone.
You can also voluntarily register your business for VAT where the value of taxable supplies is below the VAT registration threshold (£85,000). The main benefit of doing so is that this allows the business to reclaim input VAT incurred in relation to the provision of VATable supplies. This must be weighed against the impact of this on customers – for example, if customers are VATable businesses they are able to recover any VAT charged (subject to the normal VAT recovery rules), however, if they are consumers this will become an additional cost and will may put you at a commercial disadvantage.
Furthermore, you can register for VAT before you begin making taxable supplies in order to recover any input VAT on your start-up costs.
Submitting VAT Returns:
Even if you have no VAT to pay or reclaim, you will be required to submit quarterly VAT returns to HMRC from your effective date of registration for VAT.
HMRC will confirm your company’s accounting periods on your VAT4 certificate, which will therefore confirm when VAT returns and corresponding payments are due to HMRC.
However, businesses that make taxable supplies at the zero-rate and incur input VAT may file a monthly VAT return rather than a quarterly one. This is because the business is always in a repayment position, so in such cases, it would be worth switching to monthly VAT returns to receive the refunds on a monthly basis as opposed to waiting three months to recover, this will therefore assist from a cash flow perspective.
Furthermore, subject to certain conditions a business may join the annual accounting scheme, whereby a single VAT return is due for a calendar, although advanced payments are due throughout the year towards the business’s VAT bill – the value of these payments is based on the previous year’s liability.
The deadline for submitting a VAT return is usually one calendar month and seven days after the end of an accounting period. This is also the HMRC payment deadline. For example, for periods ending March, the return and corresponding payment will likely be due no later than 7th May, You should allow ample time for the funds to reach HMRC’s account, which may take longer if being made from a non-UK bank account.
You can access your VAT account on the government website and see when your VAT returns are due, when your payment must clear HMRC’s account, and how to appeal penalties. Once you have found this information, you should set up an email reminder to remind you of your VAT return date.
Understanding your company’s VAT duties is critical for being compliant and avoiding penalty points or fines. Furthermore, you should understand your VAT duties in order to discover strategies to save your company time and money. Speaking with VAT experts can enable you to deal with HMRC and face any VAT concerns.
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