VAT Return — What is a VAT Return?

Value Added Tax is applied when you buy goods and services from businesses. A VAT return defines how much VAT a company should pay or pay off by HM Revenue and Customs (HMRC).

A VAT Return examines the following factors to determine how much VAT you owe HMRC (or how much they owe you):

• The business net sales and purchases in three months of the accounting period
• The cost of VAT sales you owe
• The amount of VAT you can claim back for purchases made by your company.

Everything About VAT Return

All VAT-registered businesses must file VAT Returns, even if there’s no VAT to pay or get a refund. VAT Returns are not mandatory for companies that do not enrol themselves for VAT registration.

Who Needs to Register for VAT Returns?

If you are a start-up or a business whose turnover is below £85,000/year, there is no need to register VAT with HM Revenue and Customs (HMRC).

There are many circumstances to decide whether you’re eligible for a VAT return or not. E.g. if you already have a good customer base in your locals and you’re thinking of shifting into a location where your revenue can cross the mark of £85,000, you need to register.

Instead of being confused, it is better to ask for professional help to make the decision quickly; you can contact Pearson McKinsey for tax-related assistance in the UK.

Basic VAT Return Explained

If you’re about to become a VAT registered business, the explanation below will help you understand it more readily.

• VAT applies when you sell products
• VAT applies when you purchase products

Consider you are a wooden chair manufacturer selling wooden chairs. To make a chair, you have to buy wood first at a cost that includes VAT.

Your chair selling would be only £100 without VAT tax, and you will make a profit of £40 because you’re paying the same amount for wood buying, that is £60.

VAT Return Online

With the digital evolution, the revenue and customs department makes it easy to file the VAT return online using the software. To be eligible for it, you have to register your account at https://www.gov.uk/submit-vat-return.

To submit a VAT return online, you must keep the digital records of the transaction, such as recipient name, date, transaction ID, bill number, and the transaction amount.

Pearson McKinsey can also help you submit your VAT return online.

Bottom-Line

The VAT return deadline is one calendar month and seven days after the end of an accounting period. Every three months, you must send a VAT Return to HMRC. Know your VAT return eligibility today and start filling your VAT returns today.