VAT Returns & Recovery in the UK
For UK VAT purposes, businesses typically follow quarterly prescribed accounting periods, although they have the option to request monthly accounting periods. In certain circumstances, HMRC may direct businesses to adopt monthly accounting periods under Article 25 of the VAT Act 1994.
VAT returns are generally required to be submitted one calendar month and seven days after the end of the accounting period.
In the case of errors identified in previously submitted VAT returns, corrections should be made within four years from the end of the relevant accounting period. This allows businesses to rectify any mistakes or discrepancies within a reasonable timeframe.
Read more about VAT recovery and VAT returns in the UK in our comprehensive guide.
VAT Returns in the UK
UK VAT periods are typically set quarterly. However, businesses have the option to select an alternative VAT cycle. Monthly VAT returns might be advantageous for companies frequently seeking VAT refunds from HMRC. UK enterprises can also align their quarterly VAT cycles with their fiscal calendars. On the other hand, annual VAT accounting might help smaller businesses reduce costs.
Submission Deadlines
Returns must be filed and payments completed by the final business day preceding the 7th day of the month that follows the report month or quarter. If an entity’s reporting doesn’t align with the end of a calendar month, they have the option to choose non-standard tax durations.
Submission Processes
In the UK, VAT returns and their corresponding payments are mandatorily done electronically. Few exemptions exist, but these require formal requests. Such exceptions include instances involving insolvency, specific religious groups with electronic filing objections, and taxpayers who face electronic filing challenges due to reasons like disabilities, age, or residing in places where electronic submissions aren’t feasible.
Selling in the UK?
VAT Recovery in the UK
Section 26 of the 1994 VAT Act and the 1992 Value Added Tax (Input Tax) Order both outline several exemptions. Deductions related to input tax are limited. Consequently, in situations like:
- Buying cars not wholly used for business purposes.
- Goods or services for personal use.
- Non-commercial items or services obtained by charitable or non-profit entities, including business meals or beverages.
- Art, antiques, second-hand items, and collectibles (though these items might qualify for a special VAT “margin scheme”).
Input tax isn’t eligible for a refund.
Reimbursements
If the recoverable input VAT amount a taxpayer has paid surpasses the output VAT owed for a specific duration, HMRC will provide a VAT refund. The refund can be claimed on the standard VAT return by indicating the net VAT responsibility as a negative figure.
Typically, within 10 business days after receiving a VAT return, HMRC directly deposits the repayment into the taxpayer’s banking account. The bank account should be registered under the name of the person or business applying for the refund.
In instances where there’s a delay exceeding 30 days by HMRC in sanctioning the anticipated refund, the taxpayer might be eligible for compensation.
Previously, prior to Brexit, an EU-wide digital cross-border refund system (“EU refund scheme”) was used for UK returns. Post-Brexit, this mechanism isn’t accessible anymore. However, for businesses in the EU and Northern Ireland that incur VAT charges on goods in Northern Ireland, VAT recovery is still possible through the EU refund initiative.
Last Updated: 28/08/2023
Disclaimer
The information provided by Global VAT Compliance B.V. on this webpage is intended for general informational purposes only. Global VAT Compliance B.V. is not responsible for the accuracy of the information on these pages, and cannot be held liable for claims or losses deriving from the use of this information. If you wish to receive VAT related information please contact our experts at support@gvc.tax
