Filing VAT returns correctly and on time is crucial for the smooth operation of any small business in the UK. Whether you’re a new business owner or need a refresher on the process, understanding the VAT return procedure will help you avoid penalties and stay compliant with HMRC regulations. In this article, we’ll guide you through the step-by-step process of filing VAT returns and how Lanop Business and Tax Advisors can assist you in simplifying and managing this task efficiently.

What is a VAT Return?

A VAT (Value Added Tax) return is a summary of the VAT your business has charged customers and the VAT you’ve paid on business-related goods and services. It must be submitted to HMRC, usually on a quarterly or annual basis, depending on your VAT scheme. The return helps HMRC assess whether your business owes VAT or is eligible for a VAT refund.

Step 1: Check if Your Business is VAT-Registered

Before you can file a VAT return, you must first ensure your business is VAT-registered with HMRC. As a small business in the UK, you must register for VAT if:

• Your taxable turnover exceeds the VAT registration threshold, which is £85,000 (as of 2025).
• You voluntarily choose to register for VAT to reclaim VAT on purchases or improve your business credibility.

If your business exceeds this threshold, you must register for VAT within 30 days of hitting it. Once registered, you’ll receive your VAT registration number, and you’ll need to file VAT returns regularly.

Step 2: Gather Your Business Records

Before submitting a VAT return, you need to gather all the relevant records for your business activities during the VAT period. This includes:

• Sales invoices: These will detail the VAT you’ve charged customers.
• Purchase invoices: These will show the VAT you’ve paid on goods and services for your business.
• Receipts: For any VAT-relevant expenses.
• Bank statements: To cross-check VAT payments and receipts.

It’s vital to ensure that your records are accurate and up-to-date. Incorrect information can result in fines or penalties from HMRC.

Step 3: Calculate Your VAT Liability

Once you have all the necessary records, you can calculate your VAT liability. The process involves:

1. VAT on Sales (Output Tax): Total the VAT you’ve charged your customers on sales made during the VAT period.
2. VAT on Purchases (Input Tax): Total the VAT you’ve paid on business-related purchases during the period.
3. VAT Due or Refund: Subtract the VAT on purchases from the VAT on sales to determine whether you owe HMRC or are due a VAT refund.

Example:

If your business charged £10,000 in VAT on sales and paid £5,000 in VAT on purchases, your VAT liability would be £5,000. This is the amount you would need to pay to HMRC.

Step 4: Complete Your VAT Return Online

HMRC requires businesses to file VAT returns online through their Making Tax Digital (MTD) platform. You’ll need your VAT registration number and your MTD-compatible software to file your return.

Here’s how you can file your VAT return:

1. Log into HMRC’s Online Portal: Using your credentials, sign in to your HMRC account. If you’re using MTD software, you can file your VAT return directly through the software.
2. Enter the Figures: Input the totals from your VAT on sales and purchases into the VAT return form. Your software should automatically calculate the amount of VAT you owe or will receive as a refund.
3. Submit the Return: Review your entries to ensure they are correct, then submit the return to HMRC. You’ll receive a confirmation receipt once your return has been successfully filed.

Important: Keep Your Confirmation

It’s crucial to keep a copy of the confirmation and any receipts from HMRC. This serves as proof that your VAT return was submitted on time.

Step 5: Pay Your VAT Liability or Claim a Refund

Once your VAT return is filed, HMRC will let you know if you need to pay VAT or if you’re due a refund. If you owe VAT, you must pay the amount by the deadline specified on your return. Failure to do so can result in penalties or interest charges.

You can make VAT payments online through the following methods:

• Direct Debit: Set up a direct debit to automatically pay your VAT liability.
• Bank Transfer: Transfer the payment directly from your business bank account to HMRC.

If you’ve overpaid VAT or are eligible for a refund, HMRC will send the refund to your business account.

Step 6: Record Your VAT Return

Lastly, you’ll need to keep accurate records of your VAT return and supporting documentation for at least 6 years, as required by HMRC. These records will help if you’re audited or need to refer back to them for future filings.

Tip: Stay on Top of VAT Deadlines

HMRC has strict deadlines for VAT return submissions. Missing a deadline can result in late filing penalties. Make sure you mark your calendar for the due dates to avoid any fines. You can choose quarterly or annual VAT returns depending on your business’s VAT scheme, but quarterly submissions are the most common for small businesses.

How Lanop Business and Tax Advisors Can Help

Navigating the complexities of VAT returns can be a daunting task for small business owners. That’s where Lanop Business and Tax Advisors can make a significant difference. With our expert knowledge of VAT regulations, we provide comprehensive VAT filing services to ensure that your returns are accurate, timely, and fully compliant with HMRC requirements.

Our VAT Return Services Include:

• VAT Registration: We assist with VAT registration for businesses that are required or choose to register.
• Accurate VAT Calculations: We handle VAT calculations for both sales and purchases to ensure you only pay the right amount of VAT and claim eligible refunds.
• Filing and Submission: Our team can take care of filing your VAT return via HMRC’s online portal and ensure that it’s submitted on time.
• Ongoing Support: Lanop Business and Tax Advisors offer ongoing support and advice on VAT-related matters, helping you stay up-to-date with any changes in VAT law or compliance requirements.

Let Lanop Business and Tax Advisors take the stress out of your VAT returns so you can focus on running your business efficiently.

Conclusion

Filing VAT returns doesn’t have to be complicated. By following this step-by-step process, small businesses in the UK can ensure they remain compliant with HMRC regulations. However, for many businesses, VAT filings can be time-consuming and complex. That’s why working with professionals like Lanop Business and Tax Advisors can streamline the process, minimize errors, and ensure you meet all deadlines.

If you need assistance with your VAT returns or any other tax-related matters, Lanop Business and Tax Advisors are here to help. Contact us today to discuss how we can support your business with accurate and hassle-free VAT return services.