Effectively managing your business’s finances is crucial, especially for VAT-registered businesses. One key financial task involves submitting VAT returns.
The annual VAT return summarises your year’s VAT activities, indicating additions and subtractions. This helps determine whether you owe more VAT or are eligible for a refund from HMRC. It also aids in understanding the financial performance of your organisation.
Completing your tax return showcases compliance and enhances your business’s financial health. Whether you’re new to VAT or seeking clarity, this blog provides essential insights for your UK tax return.
It covers VAT taxable turnover, important deadlines, application requirements, and what joining the VAT annual accounting schemes involves.
Why it Matters
If your VAT taxable turnover exceeds the registration threshold, VAT registration for your business is legally required. This threshold may change, so it’s crucial to stay updated on the latest figures.
VAT taxable turnover refers to the total value of goods and services you’ve sold that are subject to paying VAT. As a VAT-registered business, you can often reclaim the VAT you’ve paid on your business expenses.
This tax deduction can help increase your business’s cash flow, which you can then use to expand your business through other investments.
At the end of your VAT accounting period, you must calculate the difference between your total VAT liability and your yearly payments. You may have heard of this process as a “balancing payment,” and it ensures the accuracy of accounting.
How To Submit Application
Business’ submit their VAT return once a year, simplifying the reporting process for those with relatively stable transactions.
This can be a practical option for businesses that find monthly or quarterly reporting to be an administrative burden.
However, if your business changes a lot, you can send in your returns every quarter for better money management. This option is also suited to those who wish to converse with HMRC on a regular basis.
In both cases, the information requested by HMRC is the same. We will explore this shortly, but first, let’s grasp the deadlines.
UK VAT Return Deadlines
Usually, you need to send your return online within a month and seven days after your accounting period ends. This is also the time that you must pay HMRC.
It is important to remember that banks work on ‘working’ days, therefore you must allow enough time for payments to be processed. This is why being organisation is an essential skill.
The UK’s final VAT bill deadline changes based on your accounting period: July 31st for March to May periods and August 31st for June to August periods. This gives time for sorting out records and calculations.
You must make your final payment, calculated from your VAT return, by the deadline specified by HMRC. Missing this deadline can result in penalties, so it’s crucial to stay organised and meet your obligations on time.
Now that you understand the annual accounting period deadlines, let’s delve into what you should include in your VAT return!
What To Include On My VAT Return?
When preparing your return bills, you’ll need to include the following information:
- VAT-able Sales: Total sales value during the accounting period, without VAT.
- VAT-able Purchases: Total purchases value during the accounting period, without VAT.
- VAT Due: The VAT you owe HMRC, found by taking VAT on sales minus VAT on purchases.
- VAT Reclaimed: The VAT you can get back from HMRC based on your purchases.
- Net VAT: The difference between VAT due and VAT reclaimed.
- Adjustments: Any extra changes, like fixing old returns or changes to VAT rates.
What Not To Include
Your Annual VAT return does not require certain types of information. To produce optimal submissions, ensure you do not include the following:
- Non-VATable Items: Items that don’t need VAT, such as insurance, education services, and financial transactions.
- Sales and Purchases Outside VAT: Deals not counted for VAT, such as items sold outside the UK.
- Personal Expenses: Money not tied to your business (e.g. personal fitness memberships).
The VAT Accounting Scheme
Depending on your business and turnover, explore annual accounting schemes like Flat Rate Schemes and Annual Accounting VAT Schemes. These can help to streamline reporting and alter annual returns.
If you join the scheme, you’ll be granted an extra month to file your annual return. This can provide more time for accurate calculations and submissions.
Since this option might not suit everyone, consulting financial advisors can assist you in making choices that align with your business’s benefit. Hiring an accountant optimises your application and relieves you of the financial stress.
How To Manage Your VAT Return
You need to maintain thorough records of your business transactions, including purchase receipts, to back up your VAT return figures. These records are vital in the event of an HMRC audit.
Proper documentation guarantees precise VAT refund claims. Remember, HMRC has the obligation to review and audit your VAT returns to ensure accuracy and tax compliance. Thus, accurate record-keeping, including bookkeeping, is paramount.
You can manage your VAT returns online via HMRC online account. However, it can be a challenging and timely process for businesses without a finance professional.
Optimise Your VAT Return
Understanding the ins and outs of your VAT return is essential to follow tax rules and manage your business finances effectively.
Whether you choose to make annual or quarterly submissions, keeping accurate records and paying attention to details is very important. Remember, HMRC checks your returns, so being transparent and precise is vital.
By providing the right information on your VAT return and avoiding mistakes, you can navigate the process smoothly and keep your business on a solid financial path. For a helping hand during the tax season, trust LJS Accounting Solutions.
Our friendly team has an abundance of sage knowledge and experience to streamline your tax applications in the most effective and efficient way possible. To learn more about taxes, check out our informative blogs or get in touch with us at 0151 601 0000.
Alternatively, you can reach our trusted team at email@example.com. Let us handle your taxes and put you on the road to a financially stress-free life.
Keli Evans, Director at LJS Accounting Services, excels in taxation and statutory accounts. With a focus on strong client relationships, she leads a diverse portfolio, overseeing vital financial aspects like VAT, payroll, pensions, and taxation with a holistic and committed approach.