A VAT Return is a form submitted to HMRC, usually every three months, showing the VAT a business has charged on sales and paid on purchases during that period. It is used to calculate whether the business owes VAT to HMRC or is due a refund.
About VAT Returns
A VAT Return tells HMRC how much VAT you have charged on your sales and how much you have paid on your purchases in a VAT period, which is usually three months. The difference is the amount you pay to HMRC or the amount HMRC repays to you. If you are registered for VAT you must send a return for every period, even if you have no VAT to pay or reclaim.
This article explains what goes on the return, when it is due, and how to send it to HMRC with Tax Optimiser.
The Nine Boxes
| Box | What it shows |
|---|---|
| 1 | VAT due on sales and other outputs (output tax) |
| 2 | VAT due on goods acquired in Northern Ireland from EU member states |
| 3 | Total VAT due: box 1 plus box 2 |
| 4 | VAT reclaimed on purchases and other inputs (input tax) |
| 5 | Net VAT to pay to HMRC or reclaim: the difference between boxes 3 and 4 |
| 6 | Total value of sales, excluding VAT |
| 7 | Total value of purchases, excluding VAT |
| 8 | Total value of goods supplied from Northern Ireland to EU member states |
| 9 | Total value of goods acquired in Northern Ireland from EU member states |
Box 6 includes zero-rated, reduced rate and exempt sales. Boxes 2, 8 and 9 are 0 for most businesses.
Deadlines and Penalties
The deadline for sending your return is usually one calendar month and seven days after the end of the VAT period, and this is also the deadline for paying HMRC. A return for the quarter ending 31 March, for example, is due by 7 May.
For VAT periods starting on or after 1 January 2023, each late return, including a nil return, earns a penalty point. At the points threshold, which is four points for quarterly returns, HMRC charges a £200 penalty, and another £200 for each further late return while you are at the threshold. Late payment penalties start once a payment is 16 days overdue, and interest runs from the first day it is overdue.
Making Tax Digital Rules
Making Tax Digital (MTD) for VAT requires VAT-registered businesses to keep their VAT records digitally and to send their returns using compatible software, unless they are exempt from the rules. You do not need to sign up yourself: HMRC signs up VAT-registered businesses automatically.
You can keep your records in a spreadsheet if you use bridging software to send the figures to HMRC. Figures must pass between the two by a digital link, not by retyping or copy and paste.
Before You Begin
To send a VAT Return with Tax Optimiser, please make sure of the following:
- Your business is VAT registered with HMRC and you have your 9-digit VAT registration number to hand.
- Your spreadsheet, or an Excel or CSV export from your accounting system, calculates the nine box totals. Totals typed in by hand do not satisfy the digital links rule.
- You have the Government Gateway sign-in details for your business.
Heads up - If you are an accountant filing on behalf of clients, you connect to HMRC with your firm's HMRC agent account instead. See Filing VAT for clients: the accountant workflow.
Sending a VAT Return With Tax Optimiser
Tax Optimiser is bridging software: you keep your VAT records in your own spreadsheet, and Tax Optimiser reads the nine boxes from it and sends them to HMRC.
- Switch on VAT. Enable the VAT service from your dashboard and enter your VAT registration number. See VAT: getting started.
- Map your spreadsheet once. In VAT Settings, enter the sheet name and the cell that holds each of the nine boxes. See Map your spreadsheet in VAT Settings.
- Connect to HMRC. Sign in with your Government Gateway details and grant authority. Your VAT periods then come straight from HMRC. See Connect to HMRC and find your VAT periods.
- Upload the spreadsheet. On VAT Returns, open the period and drag your Excel or CSV file onto it. See Upload your VAT figures.
- Check the nine boxes. They fill from the cells you mapped and are read-only. If a figure is wrong, correct your spreadsheet and upload it again.
- Send. Click Send VAT Return and accept the declaration. HMRC's confirmation receipt is kept with the return. See Send your return and keep the receipt.
You can only send a return once its period has ended, and a nil return still has to be sent.
Heads up - Always review your figures before submitting. Once HMRC has accepted a return, it cannot be changed or sent again.
Paying Your VAT Bill
You pay HMRC directly, for example by Direct Debit, by the deadline for the return. In Tax Optimiser, the Liabilities and Payments tabs on the VAT Returns screen show what HMRC says you owe and the payments it has received. See Liabilities, payments and the quarterly cycle.
Adjustments and Corrections
Adjustments such as partial exemption, fuel scale charges and reverse charge entries are made in your spreadsheet before you upload it, because the boxes in Tax Optimiser are read-only.
If you find a mistake after a return has been sent, you correct the error instead of amending the return. You can adjust your next return if the net value of the errors is £10,000 or less, or between £10,000 and £50,000 and no more than 1% of the box 6 figure on that return. Larger errors, and any deliberate ones, must be reported to HMRC separately. See Amending a VAT return after it has been sent.
Troubleshooting
I cannot see my VAT period
Periods come from HMRC once you are connected. If one you expect is missing, use Refresh from HMRC on the VAT Returns screen.
My figures do not look right
The boxes show what was read from your spreadsheet. A box that reads zero means the mapped cell is empty or holds text instead of a number. If the sheet cannot be found, the sheet name in VAT Settings does not match a tab in your file.
My submission failed
If HMRC rejects the return, the HMRC error is shown on the return. Fix the cause and use Retry sending VAT return.
Heads up - Never submit a return you have not fully reviewed. You remain responsible for the accuracy of the figures filed with HMRC, even when using automated software.
Need More Help?
If you have any questions or run into issues while sending your VAT Return, email support@taxoptimiser.co.uk, or read how MTD VAT bridging with Tax Optimiser works.
