Getting your VAT returns done can not be fun, but it is something that puts your company on its toes when it comes to the taxman. In this blog, we will describe in simple language how you can get your VAT returns done right and well within a good time.
What Is a VAT Return
A VAT return is a form that you fill in and return to your company to demonstrate the tax you have received and paid. It is a form in which you declare how much VAT you have collected and how much VAT you have paid on things your company has purchased.
When you do a VAT return, it will tell you if you need to pay VAT or not, or if you must be refunded.
Why You Should File VAT Returns
You need to file VAT returns in advance and in the right way. Here’s why:
Obey the Law: You ought to file VAT returns because the law requires the same of you. If you are late or in the wrong way, there is a penalty.
Save Yourself More Costs: Delays in payment will have you paying more money in interest or penalty. It can make your business pay more money.
Control Cash Flow: Timely reporting allows you to control cash flow. Once you file properly, you decide whether you have to pay VAT or get refunded.
Keep Your Reputation Clean: Timely and correct filing of your returns keeps your firm well-organized and respectable.
Step-by-Step VAT Return Preparation
Let us now take you through the easy steps that you can use in order to prepare your VAT return.
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Know Your VAT Scheme
You must know what VAT scheme you are on when you are going abroad. The VAT scheme will decide how you pay VAT. Below are the basic schemes:
Standard VAT Accounting: The Most standard method of VAT. You VAT everything you buy and sell.
Flat Rate VAT Scheme: If you are a small business. You don’t calculate VAT on all your sales and purchases, but pay a flat rate of your income as VAT.
Annual Accounting Scheme: You submit only one VAT return yearly as a small business using this scheme.
Getting the VAT Scheme Right avoids errors on your VAT return.
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Get Your Records in Order
So that you can submit a proper VAT return, your ducks must be in a row. Get them all together:
Sales Invoices: These show you how much VAT you’ve charged customers.
Buy Invoices: These remind you of how much VAT you’ve paid on business expenditure.
Receipts: For each wee little small business transaction on your books.
Bank Statements: These bring you up to speed with each payment or receipt of VAT.
Keeping your documents sorted is such that it is simple to work out VAT returns. You do it on the computer with software, or manually if you prefer.
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Work Out Your VAT
Now that you have all your documents sorted, you can do your VAT. This is what you do:
Total up how much you charge VAT to customers.
Sum up all the VAT you paid for the products you bought for business.
This will tell you if you are paying VAT or if you are due a reclaim.
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Complete the VAT Return Form
- Your total sales
- Your total purchases
- VAT on sales paid
- VAT on purchases paid
Ensure you enter accurate figures before posting the form.
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Return the VAT
Send the filled form to the tax department by post. They all provide an online facility, which is more comfortable and faster.
Ensure that you fill out and submit the form on time. Delayed submission will be charged or penalized with penalty.
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Pay Any VAT You Owe
If your VAT return is telling you that you need to pay VAT, then you will need to pay it. You will be told how to pay when you are filing and sending your return.
Pay on time to not incur additional charges.
What Not to Do
Below are some of the errors that individuals make while filing VAT returns. Don’t do them so that you don’t lose the trail:
Not Keeping Proper Records: By not keeping proper records, you will lose important information and make errors.
Missing Deadline: Post on time so that you won’t get penalized.
VAT Calculation Errors: Check your figures twice. One can easily go wrong, so checking your figures twice is always an option.
VAT on Personal Items: Never put VAT on personal items. Put VAT on business items only.
Usage of Incorrect VAT Scheme: Ensure that you are implementing the correct VAT scheme for your business.
Filing VAT without any problem
Below are some of the areas on how to file your VAT without any problems:
With accounting software, you can easily track sales and purchases and submit VAT without trouble.
Send Reminders: Set reminders in your calendar for VAT return due dates to file.
Stay Tidy: Keep your records sorted at the beginning of each month. Procrastination is a no-go.
Seek Advice: Don’t hesitate to ask advice from an accountant or a VAT specialist if unsure. Better safe than sorry.
Conclusion
Complicating the payment of VAT returns need not be your problem. Just follow the simple steps above, keep good records and submit on time, and the taxmen will never darken your doorstep.
We can do your VAT returns and all the rest of your accounting requirements that you might have on your behalf at City Gates Accountants. Should you ever need to submit a request for advice or for information, then contact us. We make it easy so that you can build your business!
Frequently Asked Questions About VAT Returns
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How frequently do I need to file VAT returns?
You will usually need to file your VAT return each year or each quarter, depending on your business and VAT scheme.
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Can I file my VAT return late?
Don’t advise filing late. It may incur penalties or interest. Always attempt to file on time.
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What if I get something wrong on my VAT return?
If you make a mistake, you can re-answer the question by resubmitting the form. You must always have errors corrected before you forget.
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Can I claim back VAT on all my business expenses?
You can claim back VAT on the majority of your business expenditure, but not all of it. For instance, you cannot claim back VAT on personal spending.
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What would happen if I do not pay the VAT due?
If you fail to pay the VAT by or on the date that it falls due, you may be prosecuted, charged interest or a fine. Pay in good time and stay out of trouble.