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If an organisation is Value added tax (VAT) registered, it is mandatory to submit a VAT return to HMRC (HM Revenue and Customs) after every 3 months. The company return must encompass the following information to be provided to HMRC:

  • Total sales and purchases in the financial year
  • The amount of VAT payable by the company
  • The amount of VAT that can be reclaimed by the company
  • What is the applicable refund from HMRC
When & How to Submit a Zero or Nil VAT Return?

What is ‘Zero VAT Return’ or ‘Nil VAT Return’?

In case there is no payable VAT or no amount has to be reclaimed, still the company is required to submit a tax return referred to as ‘Zero VAT return’

VAT Notice 700/12: Filling and submitting a VAT return

The notice assists organisations to complete their VAT Return and makes available information on how organisations can submit the return to HMRC. It provides guidance through the VAT form, box by box. Additionally, it provides special advice for companies that are using VAT accounting schemes and material on submitting the return by electronic means. Typically, for VAT-registered organisations it is compulsory, by law, to file their VAT returns online and pay by electronic means. However, an organisation will not be required to do this if one or the other of the following apply:

  • If the business is run completely by active members of a religious society whose principles avert them from using computers
  • It is not rationally feasible for an individual to use a computer to file their tax returns, remoteness of location, individual’s disability, or reason of age

If either of the above stated apply to an organisations, they can contact the VAT Helpline or an accounting and taxation firm to talk over alternate arrangements. Additionally, an organisation will not be required to file returns online if it is subject to a bankruptcy procedure

Benefits of an online VAT return encompass:

  • An opportunity to obtain an electronic reminder when the return is due
  • Online method is secure and safe for sending the VAT return
  • The user is able to view an acknowledgement that HMRC has received the VAT return
  • Automatic computation to decrease errors when finalising the return
  • Up to 7 additional calendar days (compared to due date for cheques and paper returns) to file the return and pay the VAT due and if an organisations opts to pay the amount by Direct Debit online it is eligible for at least 10 additional calendar days

DO I Need to File VAT Return if case of No Trading during the period?

If you are a VAT registered business entity in United Kingdom, you must submit a Zero or Nil VAT Return even if there is no trade that took place in given period. While filing the VAT return you need to report HMRC that no transactions or sale were made during the period and therefore no VAT is due. Kindly refer to the process of filing VAT return and what to do in case of ‘Zero’ or ‘Nil’ VAT return below:

Submitting and sending a VAT return or Zero/Nil VAT Return

Mode of filing the return Description Additional information
Filing a paper return and pay by cheque The return must reach HMRC on time for the cheque to clear into the bank account before the due date mentioned on the return – due date is usually 1 month afterward the end of the VAT period. Organisations must take into account bank holidays, any postal delays and weekends If an organisation uses the Annual Accounting Scheme, the due date to file the VAT return is 2 months (rather than 1 month) after the completion of the VAT period. In this scenario as well, the return and payment must reach HMRC on time for cheque to clear into the bank account before the due date shown Cheque payments should reach HMRC before the due date. A cheque usually takes 3 bank working days (excluding Saturdays, Sundays, and bank holidays) to clear. To avoid any delays by post, organisations are advised to send documents at least 3 working days before so that it can reach HMRC
Filing a paper return and paying electronically A business receives up to 7 extra calendar days for both electronic payment and return to reach HMRC (except if the business uses the Annual Accounting scheme or make Power of Attorney (POA)) A business must ensure that funds should be cleared in HMRC’s bank account by the seventh day, prior to the due date else the business will be liable to an additional charge for late payment It must be noted that an organisation will not get extra time to file a paper return in case of ‘Zero VAT return’ or if it is a repayment In case the seventh day of the calendar is a bank holiday or a weekend, the return along with payment must reach HMRC before the holiday or weekend. Bank working days are from Monday to Friday apart from bank holidays For payments made other than CHAPS, it usually will take 3 bank working days to clear the payment to HMRC’s account. Please check with building society or bank and confirm the time it takes to transfer the amount. If building society or bank take a longer time, organisations will be required to initiate the payment earlier
An electronic payment and electronic return (except online Direct Debit) Organisations will typically get an additional 7 calendar days for returns (containing ‘Zero VAT’ return and repayment returns) and any electronic payment to reach HMRC (except if the business uses the Annual Accounting scheme or make Power of Attorney (POA)) A business must ensure that funds should be cleared in HMRC’s bank account by the seventh day, prior to the due date else the business will be liable to an additional charge for late payment If payment reaches HMRC later than the due date, organisations will be liable to a surcharge for late payment If organisations submit their return online, they must pay by an approved electronic method
Pay by online Direct Debit and an electronic return Organisations will typically get additional 7 calendar days for the return to reach HMRC (except if the business uses the Annual Accounting scheme or make Power of Attorney (POA)) In case the seventh day of the calendar is a bank holiday or a weekend, the return along with payment must reach HMRC before the holiday or weekend. Bank working days are from Monday to Friday apart from bank holidays Organisation must set up DDI prior to submitting the next return and this should be done at least 2 bank working days prior to the return due date. If the return due date falls on a bank holiday or weekend, organisation will be required to set up DDI at least 3 bank working days prior to the return is due

Things to check before sending a VAT return

  • If all outputs are regular rated; the aggregate in box 1 should be 20% of the aggregate in box 6
  • If an organisation has entered any value in box 9, do take into account any acquisition tax due on intra-EC procurements in box 2 and box 4
  • An organisation’s box 5 aggregate should be the variance between box 3 and box 4 – this is computed automatically when the return is filed online
  • In case the aggregate in box 8 is in excess of that in box 6, or the aggregate in box 9 is in excess of that in box 7, the values might have been rearranged in the box figures by error
  • When the return is completed online, check that the correct figures have been entered before clicking the ‘submit’ button – once the submit button is pressed, users can’t modify it online
  • Each box on the return must be completed – enter ‘NONE’ in case of a paper return and ‘0.00’ in case of an electronic return

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