Are you running a business in the UK? If your annual turnover is higher than the minimum threshold (£85,000) it is essential that you register for VAT as soon as possible. Once you have become VAT-registered, you will have to submit VAT Returns regularly to HMRC. In this article we’ll take a look at all the details around VAT.
How often do you have to make a VAT Return?
If you are a VAT-registered business in the UK, you will need make a VAT Return every quarter through the financial year. The deadline for this return is always one month and seven days after the end of the period that it covers. If you need to make a VAT payment, which will be calculated based on your business’ income and expenses, it will need to be done at the same time.
The VAT Return deadlines do not follow a calendar year, but rather operate on a rolling cycle as determined by your business or firm. For example, if the VAT Return period is from 01 April 2022 to 30 June 2022, then your deadline will be 7 August 2022.
How to register to pay owed VAT
You will have to register on the UK government’s website to be able to make your VAT Return. The good news is that once you are registered, it’s easy to pay VAT online through the same portal.
The government’s website is large and covers a wide range of departments. Even if you have created a user profile, it does not mean that you are able to pay VAT yet. You will need to provide further details for your profile with HMRC. These will include:
- VAT number for your business
- Postcode for your business
- VAT registration date
- Month of last VAT Return submitted
- The amount contained in Box 5 of that return
You will need to supply a few other personal and business details to complete the registration process. You will then be provided with your Government Gateway User ID and be able to activate your account.
As a VAT-registered business or sole trader, you are obligated to:
- Pay VAT on purchases (from other businesses)
- Charge VAT on sales
- Make quarterly VAT Returns
- Settle outstanding VAT still owed to HMRC
How to pay VAT online
Now that you’re registered on the government’s website, it’s a straightforward process to be able to settle your VAT bill. Once you have completed your VAT Return, you will be informed whether you still owe VAT to HMRC (or if you are able to claim a VAT rebate). There are several ways you are able to do this, most of which are online.
It is essential that any owed VAT is received by HMRC in their bank account by the deadline for that specific return. Proof of the transfer will not be accepted as meeting the deadline. The funds need to have cleared in the account for you to be considered as having made the payment. Sometimes a deadline will fall on the weekend or a public holiday. Where this is the case, the funds must clear in the account by the close of business on the last working day before the deadline.
The method you choose to make the payment will depend on the amount of time you have to meet the deadline. If the funds need to arrive on the same or next day, then the best options are CHAPS, telephone banking, CHAPS or through your online bank account. If you have a bit more time and can take three working days, then you may choose to use debit or corporate credit cards, Direct Debit, Bacs or in person at your bank or building society.
Even if you have some time to make your payment, we still generally recommend using your bank account to pay VAT online. It’s the easiest and most straightforward. To do so, you just need to go through to the relevant section of the government website. After signing in, you will see an option to “pay by bank account”. Select this and then follow the prompts to sign into your bank account. You will then be able to approve the transfer and action the payment.
