HOW TO FILE A VAT RETURN:
The Definitive Guide (2026)
Everything you need to know about VAT Returns — from the basics to Making Tax Digital, Flat Rate VAT, and fixing mistakes. Start here.
File Your VAT Return FreeChapters
Chapter 1
VAT: The Basics
What it is, and how it works.
What is VAT?
VAT is also known as Value Added Tax. It’s a tax on sales of goods and services.
Any company that sells more than £90,000 in the UK needs to register – although you can also register voluntarily below that threshold if you choose to do so.
If you’re registered for VAT, then whenever you sell anything, you’ll need to account for VAT in the sale at the correct rate. You need to collect this VAT and repay it to HMRC, and give your customer an invoice or receipt that states the VAT included in the sale.
And whenever you buy anything, you’ll usually receive a VAT invoice which shows the amount of VAT included in the transaction. You need to keep this record so you can reclaim the VAT from HMRC.
Who needs to file a VAT Return?
VAT returns need to be filed by any company registered for VAT with HMRC.
You’ll need to register with HMRC if you have a turnover (total sales) in any year of £90,000 or more.
You can also register for VAT if your turnover is below £90,000, and in some cases it would save you money to do so. For example, if you sell lots of items that are zero rated for VAT, but have lots of expenses at the normal 20% rate of VAT, then registering for VAT can mean you get a net refund every month.
How often do I need to file a VAT Return?
Most companies need to file a VAT Return every quarter (every 3 months).
Your VAT periods will usually run from the 1st of a month to the end of the 3rd month. So for example, your VAT periods might be 1st January to 30th March, then 1st April to 30th June, and so forth.
Some companies have to file a VAT Return every month, and some are able to file once per year. This is usually by special arrangement with HMRC – so if you want to do either of these, you can contact HMRC to arrange this.
You can also change the months you wish to file. So for example, if you currently file quarterly, starting in January – but you want to change this to start in February, you can ask HMRC to make this change. It’ll usually take a month or so for the change to go through, and you’ll then have a shorter 1 or 2 month period to file before the new regular quarterly periods begin. This can be useful if you want your VAT periods to match up with your corporation tax year (or your self assessment tax year).
How long do I have to file a VAT Return?
From the end of a VAT period you have 1 month and 7 days to file your return.
So for example, if your VAT period is 1st January – 30th March, then you’ll 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, so you’re not filing at the last minute. This helps ensure you don’t hit any HMRC penalty points for filing late.
At #GoFile, we offer a free 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. Register for free to get these sent to you automatically.
VAT Return Calculations
The VAT you pay (or reclaim) is simply: the VAT on your sales, minus the VAT on your expenses.
Let’s go through each box in the VAT Return…
This is the VAT due on the sales you’ve made in the period. If you sold an item for £120 inclusive of VAT at 20%, your Box 6 net sale is £100 (£120 ÷ 1.2) and your Box 1 VAT is £20.
Note: If you use the Flat Rate scheme, see the Flat Rate scheme calculations in Chapter 2.
This box is almost always zero. It only applies if you are based in Northern Ireland and have purchased goods from the EU under the Northern Ireland Protocol. If you have a figure in Box 2, include the same figure in Box 4.
This is Box 1 plus Box 2. Normally, unless you have a figure in Box 2, it will be the same as Box 1.
Whenever you purchase items or services in the UK, you’ll usually be charged VAT as part of that transaction. You can reclaim this VAT through your VAT Return. If you purchased an item for £120 inclusive of VAT at 20%, your Box 7 net expense is £100 and your Box 4 VAT is £20.
Box 5 is always a positive figure — it’s the difference between the larger and smaller of Boxes 3 and 4. If Box 4 is higher than Box 3, HMRC knows you’re owed a refund. For example, if Box 3 is £100 and Box 4 is £200, Box 5 is £100 (not −100).
The total value of all your sales in the period, minus any VAT charged. Include all sales (including zero rated), except sales outside the scope of UK VAT.
The total value of all your purchases in the period, excluding VAT. Include all expenses (including zero rated), except expenses outside the scope of UK VAT.
If you sell goods from Northern Ireland to the EU, include the value (excluding VAT) here. Otherwise leave as zero.
If you’re based in Northern Ireland and have bought goods from the EU under the Northern Ireland Protocol, include the value (excluding VAT) here and add the VAT due to Boxes 2 and 3. Otherwise leave as zero.
Example: Create a VAT Return using spreadsheets
You don’t need complex software to generate a VAT Return. You can use Excel, Apple Numbers, Google Sheets, or just about any spreadsheet software alongside Making Tax Digital for VAT.
The VAT Return is simply generated from the transaction history, and is ready for submission to HMRC.
- How to create a VAT Return from a spreadsheet
- How to digitally link your VAT Return with your transaction records
- What each box in the VAT Return means, and how it is calculated
- Compatible with Excel, Apple Numbers, Google Sheets, Open Office, and more
Download the example Excel Spreadsheet • Download the example CSV file
Chapter 2
The Flat Rate Scheme for VAT
A simpler way to calculate VAT — and it can even save you money.
What is the Flat Rate Scheme for VAT?
The Flat Rate Scheme is a very simple, user-friendly way to calculate and submit VAT Returns.
It lets you file VAT Returns just using your total turnover (sales) in the period. You don’t need to include any expenses in your VAT Return.
Instead, under Flat Rate, you just pay a simple percentage of your total turnover.
And the great news? Your Flat Rate percentage is based on the average expenses in your industry. So if you have lower than average expenditure, you’ll even save money compared with the regular scheme.
Who is eligible for the Flat Rate VAT Scheme?
Before you can use the Flat Rate scheme, you’ll need to apply to do this. You can apply through the HMRC Gateway at: gov.uk
Most companies with an annual turnover below £150,000 will be eligible to join the scheme.
Other conditions can apply, such as if you’ve left the scheme in the past year.
For full details, see: gov.uk/vat-flat-rate-scheme/eligibility
What is my Flat Rate percentage?
Your applicable Flat Rate percentage is determined by your business type, and will take into account the average expense ratio in your industry. You can check the Flat Rate percentage for your industry at: gov.uk/vat-flat-rate-scheme/how-much-you-pay
If you have lower expenses than the average for your industry, the Flat Rate scheme can save you money. If your expense ratio is higher than average, or if you make a lot of zero rated sales (such as exports), it might be better to be on a different VAT scheme.
Also be aware: if you’re a ‘limited-cost business’ – i.e. your goods cost less than 2% of your turnover, or less than £1,000 per year – you’ll need to pay the maximum 16.5% rate.
Extra tip: You’ll get an extra 1% discount during your first year of VAT Registration.
How to calculate your Flat Rate VAT Turnover
Your Flat Rate VAT turnover is the total amount of sales (including VAT) you make in a period.
You’ll include the value of all your sales (including VAT). The only exception is if you sell services internationally, in which case they are outside the scope of UK VAT, under the Place of Supply rules.
So simply: add together the value of all your sales … and that’s your Flat Rate turnover. This is the figure used in Box 6 of your VAT Return.
How to complete a VAT Return on the Flat Rate Scheme
If you’re on the Flat Rate VAT Scheme, your VAT Return is usually much easier to calculate than on any other scheme.
- Your Box 6 figure is your Flat Rate Turnover (total sales including VAT)
- Your Box 1 figure is your Flat Rate Turnover × your Flat Rate percentage
- Box 3 and Box 5 will be the same as Box 1
- You can usually leave Boxes 2, 4, 7, 8, 9 as zero
The only exception is where you have made a capital asset purchase (such as machinery) worth £2,000 or more in a single transaction. In this case, you can reclaim the VAT on that transaction in Box 4, and enter the value (excluding VAT) in Box 7.
Helpful hint: If you’re using the #GoFile example spreadsheet to generate your VAT Return, use the Flat Rate VAT worksheet – and set the Flat Rate VAT percentage to your own one.
Chapter 3
How to File a VAT Return with MTD
Making Tax Digital: what it is, how to get started, and how to submit.
This chapter is all about filing VAT Returns with Making Tax Digital. You’ll learn:
- How to get ready for Making Tax Digital
- How to authorise software with MTD
- How to submit a VAT Return
- New features available with MTD
What is Making Tax Digital for VAT?
Making Tax Digital is the new way to generate VAT Returns and submit them to HMRC.
It’s intended to make submissions faster, easier, and more accurate. And HMRC says it’s helped businesses file VAT Returns more accurately than ever before.
To put it simply, it means your VAT Return is automatically generated by your sale and purchase history. This means you no longer need to manually calculate your figures with pen and paper – it’s all done automatically for you by your chosen software.
As of April 2022, Making Tax Digital is now a requirement for all companies submitting VAT Returns.
How to get started with Making Tax Digital
If you’re registered for VAT, the next step is to choose some Making Tax Digital compatible software.
There are different software options – and each will have pros and cons.
Here at #GoFile, we try to be one of the lowest cost MTD providers available, while maintaining an exceptional service, and helping our customers file VAT Returns as painlessly as possible.
We currently help over 30,000 companies file VAT Returns each year – feel free to check out our reviews at Trustpilot to see what other users have to say.
Looking for something else? Check the list of HMRC Recognised software providers for more options.
How to authorise VAT software with Making Tax Digital
Once you’ve selected software, you’ll need to authorise that software with HMRC.
To do this, log into your software, and follow the process they’ll provide. You don’t need to log into the HMRC Gateway first; the authorisation is done from within your software.
Using #GoFile? Here’s how to authorise our service with HMRC:
- Log into #GoFile, and go to VAT > Settings
- Click Authorise with HMRC
- This will load a HMRC Gateway screen – click Continue, and use your HMRC Gateway ID to log in
- Confirm authorisation – and you’re done.
Once you’ve authorised your software with HMRC, you’ll be able to submit VAT Returns, check the status of past submissions, and confirm payments made and liabilities outstanding on your Making Tax Digital account.
Watch: How to file a VAT Return with MTD
The video below shows how to submit a VAT Return with Making Tax Digital … in 30 seconds!
Making Tax Digital: Questions & Answers
What are the benefits of Making Tax Digital?
HMRC says that Making Tax Digital will make VAT Returns easier to file, faster to file, and more accurate than before.
Since your VAT Returns are automatically generated from your transaction history, it’ll be easier to calculate and keep up to date with VAT.
And that’s actually borne out in practice. Even though there’s a small learning curve in getting started with MTD, our users report being more confident in their figures, having to spend less time calculating VAT, and having a more reliable overview of their VAT position.
Do I have to use Making Tax Digital for VAT?
Yes – now that Making Tax Digital for VAT is mandated for all VAT Registered businesses, you’ll need to use MTD to file your VAT Returns.
It’s no longer possible to file VAT Returns through the HMRC Gateway directly.
Can I opt out of Making Tax Digital for VAT?
If you feel you are unable to use Making Tax Digital, you can present your case to HMRC. They will consider your case – but it’s usually very unlikely that you are able to file your VAT Returns outside of the Making Tax Digital service.
How do I file a VAT Return through MTD?
To file a VAT Return through Making Tax Digital, you’ll need to first select a VAT software service, such as #GoFile.
You can then submit your VAT Returns through your VAT software provider – see the example video above.
What features are available through Making Tax Digital?
Making Tax Digital means you can now access your VAT information from anywhere – even your phone. You can, at a glance, see:
- Past submission history
- Current VAT Obligation periods
- Your VAT liability positions
- Your VAT payment history
The options and features available to you may differ depending on the software you decide to use.
At #GoFile, we also provide a free ‘reminder’ service, and will optionally send you reminders of any upcoming VAT Return periods.
Chapter 4
VAT Returns 101: Getting Everything Right
Common questions, corrections, and what to do if something goes wrong.
This chapter covers the most common questions about VAT Returns, so you can be confident you’re filing correctly. You’ll also find out how to correct a mistake, and what to do if you receive a penalty point — it happens, and it’s easier to resolve than you might think.
I am owed a VAT Refund … should Box 5 be negative?
Box 5 is always a positive figure, being the difference between the larger and smaller of Boxes 3 and 4. So if you are due a refund, please ensure that Box 5 is Box 4 minus Box 3, and this will be calculated correctly.
HMRC will see that Box 4 is higher than Box 3, and therefore know that Box 5 is a refund due rather than tax owed.
The VAT Periods in my MTD software seem to be incorrect
The VAT Obligation Periods are sent direct to your account by HMRC.
If the period you want to file isn’t available, or it doesn’t match the dates you’d expect to see, please contact the HMRC VAT Enquiries Team at: gov.uk/contact/vat-enquiries
They should be able to reset your obligation periods so that the full obligation period is available to be submitted. After they make any change, allow 2 hours and the change should then be reflected in your VAT software.
I made a mistake in my VAT Return … help!
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.
It happens! And with over 300,000 VAT Returns filed through our service, we’ve seen hundreds of issues like these.
The good news is, it’s fairly easy to fix. If you file a VAT Return with errors, you can correct this in 2 different ways:
Method 1: Adjust your next VAT Return
You can correct any mistake up to £10,000 value by adjusting the figures for your next VAT Return. It really is that simple – just include the transaction you missed out in your next return.
Method 2: Use the HMRC VAT Corrections Service
If the difference in your VAT Return is £10,000 or more, you’ll need to use the HMRC VAT Corrections Service.
You can also use this service if you want to make the correction immediately – useful if, for example, you meant to reclaim VAT but 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.
Access the service at: gov.uk/vat-corrections
I received a VAT penalty point from HMRC. What does this mean?
A VAT penalty point means HMRC has recorded a late submission or late payment on your account. Each time you file a VAT Return late or miss a payment deadline, you receive one penalty point.
Points accumulate, and once you reach the threshold for your filing frequency, HMRC issues a £200 fine. The thresholds are:
- Quarterly filers: fine after 4 penalty points
- Monthly filers: fine after 5 penalty points
- Annual filers: fine after 2 penalty points
Each subsequent late submission while you are at the threshold adds a further £200 penalty. HMRC may also charge interest on any VAT paid late.
The good news: penalty points expire after a set period of compliance (typically 24 months of on-time filing). If you address the issue quickly and file on time going forward, your record will clear.
The most important thing to do right away is file any overdue VAT Returns and pay any outstanding VAT. This stops further points from accumulating.
How do I dispute a VAT penalty point?
If you believe a VAT penalty point has been issued incorrectly, you can appeal it. Start by gathering evidence that you acted in good time — for example, a record that your VAT Return was filed on time, or proof of payment.
Here’s how to dispute a VAT penalty point:
- Contact the HMRC VAT Enquiries Team to raise the issue. You can find their contact details at: gov.uk/contact/vat-enquiries
- Provide your VAT registration number and a clear explanation of why you believe the point was issued in error.
- Submit any supporting evidence — such as your submission confirmation email, bank payment record, or software submission history.
- If HMRC does not agree to remove the point, you can submit a formal appeal. Visit gov.uk/tax-tribunal for information on appealing to an independent tax tribunal.
Keep in mind: HMRC will only remove a penalty point if there is a genuine error on their part, or if you can demonstrate a reasonable excuse (such as a serious illness or a technical failure on the HMRC side). Being unaware of the deadline is not usually accepted as a reasonable excuse.
More common VAT Return questions
What happens if I file my VAT Return late?
Filing a VAT Return late earns you one penalty point from HMRC. Points accumulate, and once you reach the threshold for your filing frequency (4 for quarterly, 5 for monthly, 2 for annual), HMRC issues a £200 fine.
Each subsequent late filing while at the threshold adds a further £200. HMRC may also charge interest on any VAT that was paid late, calculated as a daily rate based on the Bank of England base rate.
To stop the situation from getting worse, file any overdue returns as soon as possible and pay any outstanding VAT. Penalty points expire after a sustained period of on-time filing.
How many VAT penalty points before I get a fine?
The number of penalty points before HMRC issues a £200 fine depends on how frequently you file:
- Quarterly filers: 4 penalty points
- Monthly filers: 5 penalty points
- Annual filers: 2 penalty points
Once you reach your threshold, each additional late submission results in a further £200 penalty — so it’s important to get back on track quickly.
Points are removed after a set period of compliance. HMRC’s guidance on penalty points is available at: gov.uk/guidance/penalties-for-not-filing-vat-returns-on-time
How do I pay my VAT bill to HMRC?
You can pay your VAT bill to HMRC in several ways. The most common are:
- Online banking (Faster Payments or CHAPS): Transfer directly to HMRC’s bank account using your 9-digit VAT registration number as the reference.
- Direct Debit: Set up a Direct Debit through your HMRC online account so payment is collected automatically on your due date.
- At your bank or building society: Using a paying-in slip from HMRC.
Your payment deadline is the same as your filing deadline: 1 month and 7 days after the end of your VAT period. Paying late may result in interest charges in addition to any penalty points.
Full details on how to pay are at: gov.uk/pay-vat
Can I get a VAT refund from HMRC?
Yes. If the VAT on your purchases (Box 4) is higher than the VAT on your sales (Box 3), you are owed a VAT refund. HMRC will repay the difference, shown in Box 5 of your return.
This is common for businesses that make lots of zero-rated sales (such as food, books, or exports) while still paying 20% VAT on their expenses.
HMRC typically processes VAT refunds within 10 working days of receiving your return. If a refund is taking longer, you can check the status through your Making Tax Digital software, or contact the HMRC VAT Enquiries Team.
Questions?
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