Handling VAT returns can be a complex and time-consuming task for small business enterprises and contractors. Yet, it’s a crucial aspect of financial management that should not be overlooked. In this informative guide, we will walk you through the ins and outs of VAT returns, including when they are due, what you’re required to report to HMRC, and the importance of getting them right. Plus, we’ll introduce you to Shield Accountancy, your trusted partner in ensuring a smooth and professional VAT return process.
Understanding VAT Returns:
Value Added Tax (VAT) is a consumption tax levied on the value added to goods and services at each stage of production or distribution. As a VAT-registered business, you are required to charge VAT on your sales (output VAT) and pay VAT on your purchases (input VAT). VAT returns serve as the mechanism for reporting these transactions to HMRC. In the UK, there are 3 different rates of VAT: standard rate, reduced rate and zero-rate.
| Rate | % | Applicable to |
| Standard | 20% | Most goods and services |
| Reduced | 5% | Children’s car seats, fuel and power for domestic use, energy-saving materials installed for domestic use |
| Zero | 0% | Books and newspapers, children’s clothes and shoes, motorcycle helmets |
Source: GOV.UK
When Are VAT Returns Due?
VAT returns are typically due every quarter, although some businesses may be on a different schedule. The due dates for submitting VAT returns and making payments to HMRC can vary, so it’s essential to stay informed about your specific filing deadlines. You need to submit your VAT Return 1 month and 7 days after the end of the 3-month VAT period. This requires you to fill 4 VAT returns every year.
What to Include in Your VAT Return:
Sales: You should report the total value of your sales, including both standard-rated (20%) and reduced-rated (5%) VAT sales, as well as any zero-rated or exempt sales. Keep accurate records of all invoices and receipts.
VAT Expenses: Include the total amount of VAT you’ve paid on purchases and expenses. This includes VAT on supplies, services, and goods that you have used for business purposes.
Output VAT and Input VAT: Calculate the difference between the VAT you’ve charged on sales (output VAT) and the VAT you’ve paid on purchases (input VAT). The resulting figure is the net VAT you owe to or can reclaim from HMRC.
Making Adjustments: Make sure to account for any adjustments, such as partial exemption calculations or corrections from previous returns.
The Importance of Accuracy:
Accurate VAT returns are crucial for several reasons:
Compliance: Failure to submit correct VAT returns can result in penalties and interest charges from HMRC. Keeping accurate records and reporting your VAT correctly helps you stay compliant with tax regulations.
Cash Flow Management: Proper VAT management ensures that you don’t overpay or underpay your VAT liability. This can significantly impact your cash flow, and getting it wrong may lead to financial challenges.
Reputation: Reliable and accurate VAT reporting reflects positively on your business’s reputation and professionalism.
Why Choose Shield Accountancy:
Handling VAT returns can be a daunting task, especially when juggling other aspects of your business. This is where Shield Accountancy steps in to ease your burden and ensure compliance.
Our team of expert accountants specializes in serving small business enterprises and contractors. We understand the intricacies of VAT, and we stay up-to-date with ever-changing tax laws and regulations. When you partner with Shield Accountancy, you can expect:
Accuracy: We meticulously review your financial records to ensure that your VAT returns are accurate and error-free.
Timeliness: We meet VAT filing deadlines on your behalf, preventing late submissions and associated penalties.
Customised Solutions: We tailor our services to your specific business needs, ensuring that you only pay the VAT you owe and maximise your VAT reclaims.
Peace of Mind: With Shield Accountancy managing your VAT returns, you can focus on growing your business with confidence, knowing that your finances are in capable hands.
Handling VAT returns is a critical aspect of financial management for small business enterprises and contractors. Accuracy and compliance are paramount. Shield Accountancy is here to simplify the process and ensure that you meet your VAT obligations with confidence. Don’t let the complexities of VAT returns overwhelm you; let us handle it professionally while you focus on what you do best – running your business. Contact Shield Accountancy today to discover how we can help you navigate the world of VAT with ease and expertise.