How to Prepare for a VAT Return: A UK Small Business Checklist

Once you're VAT registered, you'll usually send HMRC a VAT return every three months. The return tells HMRC how much VAT you charged on your sales, how much you paid on your business costs, and the difference you owe or can reclaim. With good records it takes minutes. Without them it can take days. This checklist shows how to get it right.

Step 1: Know your VAT periods and deadlines

Your VAT periods are set when you register, and you can see them in your HMRC online account. Most are quarterly. Some businesses use monthly returns (often those who usually reclaim VAT) or the Annual Accounting Scheme.

VAT quarter ends	Submit and pay by
31 March	7 May
30 June	7 August
30 September	7 November
31 December	7 February

If you pay by Direct Debit, HMRC collects the payment a few days after the deadline, so you get slightly longer. The Direct Debit must be set up well before the deadline.

Step 2: Make sure your records are digital

Under Making Tax Digital for VAT, you must keep your VAT records digitally and send returns using software that connects to HMRC. Accounting apps such as those listed on GOV.UK do this, and some bridging software lets you file from a spreadsheet. You can't type your return figures into the old HMRC online form.

Your digital records need to include, for each sale and purchase, the date, the value excluding VAT and the VAT rate charged. You must keep VAT records for at least 6 years.

Step 3: Gather everything for the period

• All sales invoices you issued in the period, including any credit notes
• All purchase invoices and receipts for business costs
• Bank statements, so you can check nothing is missing
• Details of any goods you imported or services you bought from abroad
• Your last VAT return, to check for anything carried forward

Step 4: Understand the nine boxes

Your software fills in the return from your records, but you should understand what each box means so you can spot mistakes.

Box	What it shows
1	VAT due on your sales and other outputs
2	VAT due on goods brought into Northern Ireland from the EU (Northern Ireland businesses only; usually 0 in Great Britain)
3	Total VAT due: Box 1 + Box 2
4	VAT you're reclaiming on purchases and other inputs
5	Net VAT to pay or reclaim: the difference between Box 3 and Box 4
6	Total value of sales, excluding VAT
7	Total value of purchases, excluding VAT
8	Goods supplied from Northern Ireland to the EU, excluding VAT
9	Goods acquired from the EU into Northern Ireland, excluding VAT

If Box 3 is bigger than Box 4, you pay HMRC. If Box 4 is bigger, HMRC repays you.

A simple example

In a quarter, a business sells £30,000 (excluding VAT) at 20% and buys £8,000 of supplies (excluding VAT) at 20%:

• Box 1: £6,000 VAT on sales
• Box 4: £1,600 VAT on purchases
• Box 5: £4,400 to pay HMRC
• Box 6: £30,000. Box 7: £8,000

Step 5: Run these checks before you submit

1. Every sale is included. Match your sales invoices to money received in the bank.
2. You have valid VAT invoices for what you reclaim. You generally need a VAT invoice to reclaim VAT. A card slip or a pro forma isn't enough. See what a VAT invoice must include.
3. You're only reclaiming what's allowed. You can't reclaim VAT on business entertainment of clients, or usually on buying a car that's available for private use. Only reclaim the business share of mixed-use costs.
4. Zero-rated and exempt costs have no VAT. Train fares, most food and insurance shouldn't appear with VAT. For example, there is no VAT on train tickets to reclaim.
5. Suppliers are VAT registered. If a VAT number on an invoice looks wrong, check it with HMRC before reclaiming.
6. Credit notes are included for both sales and purchases.
7. The figures make sense compared with previous quarters. A big jump in Box 4 is worth a second look.

Step 6: Submit and pay

Submit through your MTD-compatible software. You'll get a confirmation from HMRC. Then pay any VAT due by the deadline, using Direct Debit, online or telephone banking, or a debit or corporate credit card. Your payment reference is your 9-digit VAT registration number.

Step 7: If you've made a mistake

If you find an error in a past return, you can usually correct it on your next return if the net value is below the error correction limit. Larger errors, or deliberate ones, must be reported to HMRC separately. Check the current limit on GOV.UK before adjusting.

Late returns and payments

HMRC uses a points system for late VAT returns. Each late return gets a point, and when you reach the points threshold (4 points for quarterly filers) you get a £200 penalty, plus another £200 for each further late return. Late payments are charged separate penalties and interest, which increase the longer the VAT is unpaid. If you can't pay on time, contact HMRC before the deadline — you may be able to agree a payment plan.

Your VAT return checklist

• Know your period end and deadline
• Records kept digitally in MTD-compatible software
• All sales and purchase invoices entered, with credit notes
• Bank reconciled
• Only valid, allowable VAT reclaimed
• Figures sense-checked against last quarter
• Submitted and paid by the deadline

Frequently asked questions

Do I need to file a return if I had no sales?

Yes. You must submit a return for every VAT period, even if all the figures are zero.

Can I file my VAT return myself?

Yes, as long as you use MTD-compatible software. Many small businesses do. An accountant or bookkeeper can also file for you.

When will I get a VAT repayment?

HMRC usually repays within about 10 days of receiving your return, if there are no checks.

Useful tools

The VAT Invoice Calculator checks the VAT on invoices with several lines or rates, and the Reverse VAT Calculator splits the VAT out of receipts that only show a total.

Official sources: GOV.UK: Submit your VAT return and GOV.UK: VAT returns.