VAT Returns seem to come with a notorious reputation as being very complicated – I promise you, they really aren’t!
If your turnover, during any 12 month rolling period ever hits the VAT threshold (currently £83,000 in 2016-17), but increasing to £85,000 in 2017-18, you are legally required to register for VAT.
Once registered, a VAT Return will be due to be filed with HMRC at the end of each quarter (3 month period). VAT Return cycles vary but the most common is (Mar, June, Sep, Jan). Once we reach the VAT quarter end, you have one month and one week to file the return with HMRC e.g QE 31st
March is due by 7th May, QE 30th June is due by 7th August….
At the end of each quarter, you will either have a VAT liability (which will need to be paid to HMRC by the filing deadline) or you will be due a refund from HMRC depending on the figures.
Here are the two simplified outcomes at the end of each quarter...
|VAT ON PURCHASES||£500||VAT ON PURCHASES||£200|
|VAT ON SALES||£200||VAT ON SALES||£500|
|REFUND FROM HMRC||£300||DUE TO HMRC||£300|
At the end of the quarter, if your VAT on purchases is more than your VAT on sales, you will be due a VAT refund from HMRC, however if the VAT on sales is more than your VAT on purchases you will owe the difference to HMRC.