How to Submit a VAT Return in the UK

Submitting a VAT return is a legal obligation for VAT registered businesses operating in the UK. Whether you are a UK entity or an overseas company making taxable supplies, you must submit a VAT return online through HMRC VAT systems within the required accounting period. Understanding how to submit a VAT return correctly helps avoid penalties, interest charges and compliance risks.

This guide explains how to submit a VAT return, how VAT is calculated, how Making Tax Digital applies, and what VAT registered businesses must do to remain compliant with HM Revenue & Customs. If you operate across Northern Ireland or trade with EU member states, additional reporting rules may apply.

 

What Is a VAT Return?

A VAT return is a report submitted to HMRC VAT that summarises the VAT collected on taxable sales and the VAT paid on business related purchases during a specific VAT period. Most businesses submit VAT returns quarterly, although some accounting scheme options allow monthly VAT returns or annual reporting.

Each VAT return records:

• Output VAT charged on taxable supplies
• Input VAT paid on services purchased and related costs
• Total VAT collected
• VAT reclaimed on eligible business expenses
• The net VAT position

The net VAT is the difference between output VAT and input VAT. If output VAT exceeds input VAT, you will have a VAT bill to pay. If input VAT is higher, you may submit a repayment return and reclaim VAT from HMRC.

All VAT registered businesses must submit VAT returns through their VAT online account using Making Tax Digital compliant systems. Manual submission is no longer permitted under tax digital requirements.

 

Who Needs to Submit a VAT Return?

Most businesses that complete VAT registration must submit VAT returns for each accounting period, even if there is no VAT to pay. This includes:

• UK companies
• Small businesses registered for VAT
• Overseas entities making UK VAT taxable turnover
• Businesses operating in Northern Ireland
• Companies trading with EU member states

If your business has a VAT registration number, you are required to submit your VAT return by the due date shown in your online VAT account. Even if you have no taxable sales in a VAT quarter, you must still submit a VAT return.

Certain special VAT accounting schemes, such as the flat rate scheme or cash accounting scheme, change how VAT is calculated but do not remove the obligation to submit VAT returns.

Failure to submit VAT returns on time can result in penalties from His Majesty’s Revenue and Customs. Businesses that consistently miss VAT payments or fail to submit VAT returns may face compliance reviews.

Step-by-Step: How to Submit a VAT Return Online

Understanding how to submit a VAT return online requires preparation before you log into your online account. The process involves reviewing VAT records, calculating VAT correctly and ensuring your accounting software is compatible with Making Tax Digital.

 

Step 1: Prepare Your VAT Records

Before you submit a VAT return, you must ensure your VAT records are complete and accurate. This includes reviewing:

• Total sales for the VAT period
• Taxable sales excluding VAT
• Services purchased and related costs
• Input VAT and output VAT
• Any VAT claims or bad debt relief adjustments

All figures must be supported by valid evidence and digital record keeping systems. Under Making Tax Digital rules, VAT records must be stored digitally and linked to MTD compatible software.

 

Step 2: Calculate Output VAT and Input VAT

You must calculate VAT based on the tax point for each transaction. Output VAT relates to VAT collected on taxable supplies. Input VAT relates to VAT paid on business related expenses.

Your accounting software will often calculate VAT automatically, but you remain responsible for accuracy. You must review:

• Total VAT collected
• VAT reclaimed
• Net sales
• Inputs excluding VAT where required
• Outputs excluding VAT

This determines your net VAT position for the accounting period.

 

Step 3: Log Into Your VAT Online Account

Once your VAT records are prepared and VAT is calculated, log into your VAT online account through the HMRC VAT portal. You will need your VAT registration number and Government Gateway credentials to access your online VAT account.

From your online account, select the relevant VAT period. Most businesses submit quarterly returns, although some operate monthly returns depending on their accounting scheme. The VAT return online form will request:

• Total sales and total value of taxable supplies
• Output VAT due on sales
• Input VAT on purchases and related costs
• Net VAT payable or reclaimable

Check each figure carefully before submission. Errors can lead to a net error position and potential compliance action from HM Revenue.

 

Step 4: Submit Your VAT Return Online

After reviewing your figures, you can submit a VAT return directly through your MTD compatible software. Under Making Tax Digital rules, you cannot manually enter VAT figures through the old HMRC portal. Returns must be submitted digitally using accounting software connected to HMRC VAT systems.

When you submit your VAT return online, you are confirming that the information is complete and accurate. Once submitted, you will receive confirmation through your VAT online account. Keep confirmation records for your digital records and compliance files.

All VAT registered businesses must submit VAT returns by the due date shown in their VAT account, even if there is no VAT to pay.

 

Step 5: Pay Your VAT Bill or Receive a Repayment

If your output VAT exceeds input VAT, you will have a VAT bill to pay. VAT payments can be made by direct debit, bank transfer or other HMRC approved methods. Payment must reach HMRC by the due date.

If input VAT exceeds output VAT, you may receive a repayment return. In this case, VAT reclaimed will be repaid to your nominated bank account.

Some businesses operating under certain accounting scheme rules may make advance payments toward their VAT liability. This is common under annual accounting arrangements.

Late VAT payments or failure to submit VAT returns can result in penalties and interest from HM Revenue & Customs.

 

 

Making Tax Digital and MTD Compatible Software

Making Tax Digital is mandatory for VAT registered businesses in the UK. Under tax digital rules, businesses must maintain digital records and submit VAT returns using MTD compatible software connected directly to HMRC VAT systems.

This means:

• VAT records must be stored digitally
• Figures must flow from digital record keeping systems
• VAT returns must be submitted electronically
• Data links between systems must be compliant

Manual spreadsheets that are not digitally linked are no longer acceptable unless connected through bridging software.

Accounting software plays a central role in submitting VAT returns. Most businesses use accounting software that calculates VAT automatically, tracks input VAT and output VAT, and generates VAT reports for each accounting period.

Choosing the right accounting software ensures:

• VAT is calculated correctly
• Digital records are maintained
• VAT return online submissions meet HMRC requirements
• Errors are identified before submission

Failure to comply with Making Tax Digital can lead to penalties and increased scrutiny from HMRC VAT teams.

 

How to Calculate VAT Correctly

Before you submit your VAT return, you must calculate VAT accurately for the relevant accounting period. This involves reviewing all taxable sales, services purchased and business related expenses within the VAT period.

Output VAT is the VAT collected on taxable supplies. Input VAT is the VAT paid on purchases and related costs. The difference between output VAT and input VAT determines your net VAT position.

When calculating VAT, you should review:

• Total sales and net sales excluding VAT
• Total value of taxable supplies
• Inputs excluding non-business costs
• Outputs excluding VAT where required
• The tax point for each transaction

Some businesses may need to adjust for bad debt relief or previous VAT claims. Errors in calculating VAT can create a net error that must be disclosed to HMRC VAT.

Your accounting software will often calculate VAT automatically, but you remain responsible for ensuring figures are correct before you submit your VAT return online.

 

VAT Accounting Schemes and Special Rules

Certain accounting scheme options change how VAT is reported. These special VAT accounting schemes do not remove the obligation to submit VAT returns, but they affect how VAT is calculated.

Common accounting scheme options include:

• Flat rate scheme
• Cash accounting scheme
• Annual accounting scheme

Under the cash accounting scheme, VAT is reported when payments are received rather than when invoices are issued. The flat rate scheme allows eligible small businesses to pay a fixed percentage of total sales instead of calculating input VAT separately.

Most businesses must assess which accounting scheme is appropriate based on taxable turnover and reporting needs.

Businesses operating in construction services may also be subject to additional reporting requirements. Those trading in Northern Ireland or with EU member states must follow UK VAT rules specific to cross-border supplies.

 

Northern Ireland and EU Member States

Businesses operating in Northern Ireland face specific UK VAT rules for goods traded with EU member states. While the UK has left the EU, Northern Ireland continues to follow certain VAT rules for goods movement under the Northern Ireland Protocol.

If your business sells goods between Northern Ireland and EU member states, additional reporting may be required within your VAT return. This can affect how total VAT and taxable turnover are declared.

Companies trading with EU member states must ensure their VAT account reflects the correct treatment of supplies and services purchased. Incorrect reporting can result in queries from HMRC VAT.

 

Common VAT Return Errors

Submitting an incorrect VAT return can result in penalties, delayed repayments or compliance reviews. Common issues include:

• Incorrect input VAT claims
• Misreporting taxable sales
• Errors in VAT claims for related costs
• Missing the due date
• Failing to maintain digital records

If you identify an error after you submit your VAT return, you may need to contact HMRC to correct it.

Most businesses benefit from reviewing VAT records carefully before submission to reduce risk.

 

How We Support VAT Returns and HMRC Submissions

Submitting VAT returns under Making Tax Digital requirements can be time consuming, particularly for overseas companies and growing small businesses.

At Goodwille, we support clients with:

• Preparing and reviewing VAT records
• Calculating output VAT and input VAT
• Submitting VAT returns through MTD compatible software
• Managing VAT payments and advance payments
• Handling HMRC VAT queries
• Supporting businesses operating in Northern Ireland and EU member states

We work with companies across the UK to ensure VAT returns are accurate, submitted on time and aligned with UK VAT regulations.

If you need support with how to submit a VAT return or ongoing HMRC VAT compliance, contact our finance team who can assist.