Demystifying VAT: How to File a VAT Return with Making Tax Digital
VAT is a staple of business in the modern world. And in the UK, the shift to Making Tax Digital means you can file VAT Returns faster than ever before.
But it’s equally easy to make mistakes, or just be confused by the different options available.
In this guide, we’ll explain in simple terms what VAT is… and how to file compliant VAT Returns through Making Tax Digital.
Read on to find out:
- How to file a VAT Return with Making Tax Digital
- The records you need to keep, and how long to keep them
- How to calculate VAT Return figures
- How long you have to file a return
- How to get refunded, and how long it takes
- What to do when something goes wrong
- The best software available for Making Tax Digital
Ready? Let’s get started!
What is VAT?
Value Added Tax (VAT) has long been a staple of business finances, but its complexity often leaves entrepreneurs grappling with a maze of paperwork. However, in the digital age, the advent of Making Tax Digital has transformed this cumbersome process into a seamless digital experience.
Gone are the days of drowning in spreadsheets and manual calculations. With Making Tax Digital, filing a VAT return has become a swift and efficient task, often taking no more than 30 seconds. This revolutionary shift not only saves valuable time but also reduces the room for errors that often plague traditional methods.
So, how exactly does one achieve this remarkable feat? The answer lies in embracing the power of digitalization. Here’s a step-by-step guide to filing your VAT return with the speed and ease that Making Tax Digital brings to the table
How to file a VAT Return with Making Tax Digital
If you’re new to Making Tax Digital, it can seem like an absolute nightmare filing your first VAT Return. But sit back, relax, and make a cup of tea…. It’s easier than you think.
Follow the guide below to get your MTD VAT Returns filed right, first time, every time.
Step 1: Choose MTD-Compatible Software
First things first, you need to select MTD-compatible software. This software acts as your digital assistant, seamlessly integrating with your financial records and ensuring compliance with HM Revenue & Customs (HMRC) regulations.
There are absolutely loads of options available, so it’s important to choose one that works for you.
As a minimum, ensure your chosen provider:
- Is approved or authorised by HMRC
- Uses the latest security protocols to keep your data safe
- Is reliable and has a proven track history of successful submissions
- Has support available if you should need it
See the Recommended software options at the bottom of this guide for our suggested services.
Step 2: Maintain Digital Records
You’ll need to keep a digital transaction history.
This means — no more stacks of paper receipts and invoices. Simply keep your bank transaction history… which might be as easy as logging into your online bank account, and downloading a suitable transaction history.
You might find a CSV or Excel transaction history is available, which is ideal if you want to keep your transaction history in a spreadsheet, such as with Excel.
Step 3: Calculate your VAT Return figures
Making Tax Digital means automated VAT Return calculations.
No more manual calculations or hunting for formulas. MTD-compatible software automatically performs the necessary calculations, minimizing the risk of human errors and providing you with accurate figures.
Many providers like #GoFile provide an easy to use template, so you can simply generate your VAT Return figures from your digital transaction history.
Step 4: Quick Review and Submission
Once your records are up to date and accurate, it’s time to review. MTD software often comes with features that allow you to double-check your data before submission. Once satisfied, a few clicks are all it takes to send your VAT return to HMRC.
Step 5: Real-Time Insights
The digital advantage doesn’t stop at speedy submissions. Making Tax Digital provides real-time insights into your VAT liabilities, empowering you with the knowledge to make informed financial decisions on the fly.
Depending on the software you’ve chosen, you should be able to:
- View past submission history at a glance
- Check for any outstanding VAT Returns
- See your current liabilities
- Check your payment history
All these features are available through software providers like #GoFile; and you can even file returns and check information on the go through your phone.
How long do you have to file a VAT Return?
From the end of a VAT period you have approximately 1 month and 7 days to file your return.
So for example, if your VAT period is January — March, then you will need to file your VAT Return on or before the 7th May.
Helpful tip: it’s worth getting ahead and filing your VAT Return before the due date, to ensure you’re not filing at the last minute. This helps ensure you don’t hit any HMRC penalty points for filing late.
Some companies such as #GoFile offer a free VAT Monitoring service to help monitor your VAT Return due dates, and send out reminders when you have a VAT Return due within the next few weeks.
How to get refunded, and how long it takes
Once you’ve filed a VAT return with HMRC, processing normally takes 72 hours, but can take longer at busy times.
If you are due a VAT refund, you will receive this within 30 days. This will go to your bank account, if they have the details, or they will send you a cheque.
If they haven’t made the payment within 30 days you can contact them to ask why — you may be eligible for interest or compensation if the payment is delayed.
You can also change the way you would like to receive a repayment — or find out more about VAT Repayments paid by HMRC through this link: https://www.gov.uk/vat-repayments
What to do if you make a mistake on your VAT Return
Oops!
You file a VAT Return, and suddenly realise… you missed a transaction.
Or maybe you missed off a zero (or two!)
Or maybe you filed for the wrong dates, or even the wrong company entirely.
The good news is, it’s fairly easy to fix.
How to fix VAT Return filing errors — two options
If you file a VAT Return with errors, you can correct this in 2 different ways.
They each have benefits, so — if the omission is less than £10,000, just decide how you handle the adjustment.
Method 1: Adjust your next VAT Return
You can correct any mistake up to £10,000 value by simply adjusting the figures for your next VAT Return.
So let’s say you forgot to include a transaction for £120… which included £20 of VAT.
To correct this, you’d simply include the transaction in your next VAT Return.
Method 2: Use the HMRC VAT Correction Service
If the difference in your VAT Return is £10,000 or more, you’ll need to use the HMRC VAT Correction Service.
You can also use this service if you want to make the correction immediately. This might be useful if — for example — you meant to reclaim VAT, and instead paid VAT. If you file a correction immediately, you will receive the repayment faster than if you wait until your next VAT due date.
You can access the HMRC VAT Correction service through https://gov.uk/vat-corrections/
The best software available for Making Tax Digital
So — you’re ready to find software for Making Tax Digital?
With so many different options, it can seem like an absolute minefield which offers the best value for money, which is the easiest to use, and which is most suitable for your business.
So, if you’re looking for something that just …’works’ , try #GoFile VAT https://gofile.co.uk
It’s highly rated by users, with over 90% 4* and 5* reviews in Trustpilot, and over 30,000 customers in the UK.
It’s also highly secure, as it uses the latest encryption techniques to keep data safe, and is fully authorised by HMRC.
It’s also easy to use, with submissions taking as little as 30 seconds to complete.
Interested? You can get started for Free at https://secure.gofile.co.uk/register/ or find out more at https://gofile.co.uk
Note: This article is intended for informational purposes and does not substitute professional financial advice.