A Step-by-Step Guide on How to Complete VAT Return Successfully
We are confident that you know about VAT Return , however there is a higher possibility that you may feel a bit overwhelmed if you have just started your accounting practice. Also, the HMRC keeps on updating the forms and processes which can create uncertainties for you. Such uncertainties from your side will shake the confidences of your client’s who can be a small business person.
We understand that many accounting practices have been confronted with such a situation. That’s why we have created a guide that will help you complete a VAT return, calculate it, and submit it online. So, let’s get started.
What is a VAT Return?
HMRC provides a form to report VAT charged and paid to other businesses; this form is for the VAT return. If your client’s business is VAT registered, then they must complete the VAT return regardless of whether they have no VAT to pay or reclaim.
If your client’s business has a taxable turnover over £90,000, it must be registered for VAT. The taxable revenue is the total value of the goods and services sold that are not exempted from VAT. However, it must be remembered that the threshold number keeps fluctuating, that’s why for exact numbers please visit the gov.uk website.
When to Submit VAT Return?
You must submit the VAT return to HMRC every three months, known as the accounting period. After submitting the VAT return, you have one month and seven days to complete the online submission.This is also the deadline to pay the HMRC. Again, we remind you that all these numbers are subject to change; hence, for the latest details on the submission of VAT returns, visit the government website.
By now, you likely understand that registering, calculating, and submitting a VAT return online is a time-consuming and complex process. Furthermore, you are handling the VAT returns of multiple clients, which adds to the complexity of your process. Hence, to reduce your workload and increase your productivity, you can try out the VAT outsourcing services of accounting outsourcing service providers such as Corient.
How to Calculate VAT Return and Where to Submit it
To calculate the VAT return of your client, you will have to follow the below-listed steps:
1. Add up the total VAT you’ve collected on sales (output VAT)
2. Add up the total VAT you’ve paid on business-related purchases and expenses (input VAT)
3. Deduct your input VAT figure from your output VAT figure
If the result is positive, payment must be made to HMRC; if negative, your clients will receive a refund.
To submit a VAT return, you must sign up all your clients’ registered businesses for Making Tax Digital (MTD). Currently, accounting software like Xero, QuickBooks, and Sage, among others, are all compatible with Making Tax Digital (MTD). Also, maintain digital records which will enable you to make VAT returns more easily.
After completing the VAT for your client, you must ensure online payment to HMRC is made before the specified deadline. To stay ahead of the deadline, you must use a VAT payment deadline calculator to check how much time it will take for the payments to reach the HMRC account. You would not like to miss out on the VAT deadlines, or you will face penalties.
If your client is eligible for a refund, then the VAT repayments will take place within 30 days of HMRC receiving the VAT.
How to Fill in VAT Return Online
You can submit the VAT return online for your clients if they use the annual accounting scheme; otherwise, you must use accounting software.
While submitting the VAT online if any mistakes are committed then you will not get a chance to resubmit. However, if the net errors are not more than £10,000 then it can be corrected by adjusting your next VAT. Resubmission is possible if the net error ranges between £10,000 and £50,000 and doesn’t exceed 1% of your client’s quarterly revenue.
A net error is the difference between the errors in output VAT and the errors in input VAT. If the errors on your VAT don’t meet the above criteria, you will need to contact HMRC.
Conclusion
We hope this guide has clearly simplified the complex process of completing VAT returns for you. By following this step-by-step guide, you will be able to complete VAT returns for your clients successfully. The VAT process can become complicated based on your client’s business type and the number of clients managed. Managing multiple complex clients can increase workload and VAT errors, potentially risking the loss of clients’ trust. To prevent such issues, consider utilizing VAT outsourcing services from Corient, a trusted and professional accounting outsourcing provider. For more information about our services or to share your requirements, please contact us via our website.