VAT returns: what a UK business has to file, and when

A VAT return is the form a VAT-registered business sends HMRC for each accounting period. It adds up the VAT charged on sales, subtracts the VAT paid on purchases, and shows the difference that is owed or reclaimable. Every registered business must file one, even when there is nothing to pay or reclaim (HMRC's VAT Returns guidance). This guide covers when registration becomes compulsory, what the deadlines are, how Making Tax Digital changes the way returns are sent, and what goes wrong when they are late.

Every VAT figure on this page was compared with the live GOV.UK guidance on 13 October 2026. This is general information, not tax advice, and what applies to your business depends on its facts.

When do you have to register for VAT?

Registration becomes compulsory when your taxable turnover goes over £90,000 across the last 12 months, and also when you expect to go over that figure in the next 30 days alone (when to register). The test rolls forward every month, so a business whose sales are growing can cross the line without a single big contract. Taxable turnover is what you sell at any VAT rate, zero rate included, so a business selling zero-rated goods still counts those sales.

The late registration cost is the one that surprises people. If you should have been registered four months ago, HMRC expects the VAT on those sales whether or not you added it to your invoices, so you may end up paying it out of your own margin. Customers who are not VAT-registered cannot reclaim it, which is why some sole traders and small firms stay just under the threshold on purpose. Staying under the line is legitimate. Splitting a business artificially to do so is not, and HMRC may treat linked businesses as one.

When is a VAT return due?

A return and its payment are normally due one calendar month and 7 days after the accounting period ends. Most businesses file every 3 months, although your VAT online account shows your own dates. The deadline holds even if it falls on a weekend or bank holiday, so plan for the working day before. Working the rule through for standard calendar quarters gives the dates below.

What is Making Tax Digital for VAT?

Making Tax Digital for VAT means VAT records are kept digitally and returns are sent from software, not typed into HMRC's old online form. HMRC's page says all VAT-registered businesses should now be signed up, and that you no longer need to sign up yourself (Making Tax Digital for VAT). In practice you need software that keeps your sales and purchase records and can pass the figures to HMRC. If you prefer spreadsheets, ask your accountant whether they can be linked to HMRC through bridging software.

The value of this is not the filing, which takes minutes, but the records behind it. If a bookkeeper enters invoices and bank lines through the year, the return is a by-product. If receipts arrive in a shoebox in the week before the deadline, you are paying for catch-up. A bookkeeping service that keeps books monthly is usually the cheaper route to a clean quarter.

Which VAT scheme suits a small business?

Two schemes are meant to simplify things for smaller businesses. Under the Flat Rate Scheme you pay HMRC a fixed percentage of your gross turnover, set by trade sector, and you do not reclaim VAT on most purchases. Under cash accounting you account for VAT when money changes hands, not when you issue or receive an invoice. The standard scheme works on invoice dates.

The 16.5% rate catches many service businesses. HMRC classes you as a limited cost business if your spend on goods is below 2% of turnover, or below £1,000 a year when your costs are above 2% (how much you pay). A consultant who buys a laptop once a year could pay more under the scheme than under standard accounting. Ask for both calculations on your own figures before you join.

What happens if a VAT return or payment is late?

Late returns now work on points, not a surcharge. Each late return, a nil return included, adds one penalty point, and you receive a £200 penalty when you hit your threshold: 2 points for annual filers, 4 for quarterly and 5 for monthly (penalty points guidance). Each further late return while you stay at the threshold brings another £200. You can see your points in your VAT online account, and HMRC says filing future returns on time removes them.

Late payment is a separate regime. Pay within 15 days of the deadline and there is no penalty. Between day 16 and day 30 the first penalty is 3% of what was outstanding at day 15. From day 31 the first penalty adds a further 3% of the balance at day 30, and a second penalty accrues at 10% a year until you pay (late payment penalties). Interest runs from the first overdue day. If cash is tight, ask HMRC about a time-to-pay arrangement before day 15, not after.

What should you ask an accountant before hiring them for VAT?

• Which MTD software do you file through, and will I get access to my own VAT records in it?
• Do you review my scheme choice each year, and will you show me the flat rate or cash accounting calculation in writing?
• Who watches my rolling 12-month turnover against £90,000 if I am not yet registered?
• What is the fixed fee per return, and does it cover correcting errors and answering HMRC letters?
• What happens if a return is late because my records arrived late: who pays the £200 penalty?
• Can you handle an HMRC VAT inspection or an assessment, and is that included in the fee?

Fees depend on transaction volume, how tidy your records are and whether you also need bookkeeping or payroll, so get a written fixed quote that lists what is and is not included. If you are still choosing between trading as a sole trader or a company, the sole trader or limited company guide sets out how that choice interacts with VAT registration.

How can you confirm a VAT accountant is registered?

1. Find out which body regulates them (ICAEW, ACCA, CIMA, AAT, ATT or CIOT) before you hand over your VAT login.
2. Search the body's online register of members or firms and match the name, firm and location.
3. Confirm the status is current, not lapsed or suspended, and note any disciplinary entries the register shows.
4. Request proof of professional indemnity cover and an engagement letter that names who files each return.
5. For work involving HMRC, ask them to confirm they will be your authorised agent for VAT before you hand over access.

Firms are matched to the relevant register before they are listed here, and you choose which single firm receives your enquiry. You can find an accountant by city, or read the wider guides first. If VAT on building work is your question, the guide on VAT for home extensions covers the 20%, 5% and 0% rates.