HM Revenue & Customs (HMRC) is phasing out paper VAT Returns. From 1 April 2010 you may have to submit your VAT Returns online and pay any VAT due electronically (for example, by Direct Debit, internet or phone banking etc). If you are affected by this, there are things you need to do now.
Who has to switch to online VAT Returns?
From 1 April 2010 you will have to submit your VAT Returns online and pay any VAT due electronically if either of the following applies:
- you have an annual turnover of £100,000 or more (exclusive of VAT)
- you register or should have registered for VAT on or after 1 April 2010 (regardless of your turnover)
If you fall into either of the groups mentioned above, you will have to file all your VAT Returns online (including nil and repayment returns) even if your turnover drops below £100,000 in the future.
Does this affect you?
If your annual turnover was £100,000 or more on 31 December 2009, HMRC should have sent you a letter in February 2010. This letter explains that you have to submit your VAT Returns online and pay your VAT electronically for all returns starting on or after 1 April 2010.
If your turnover is less than £100,000
You currently don’t have to submit your VAT Return online and pay VAT electronically if you registered for VAT before 1 April 2010 and your VAT-exclusive turnover stays below £100,000.
However, you should note that it’s likely that all VAT-registered businesses will have to file their returns online and pay electronically by 2012, at the latest. So, you might want to switch to using the online service sooner - it will save you time and, in most cases, will give you extra days to submit your return and pay the VAT due.
Submitting your VAT Return online
The online VAT Return is very similar to the paper version and there has been no change to the rules on how you complete your return or how you calculate VAT.
Also, you won’t have to change your existing record keeping system - you can still keep your records on paper if you prefer.
Getting ready for the changes
If you think you will have to submit your VAT Return online from 1 April 2010, you should take the following action now:
- Register and enrol for the VAT online service. (You will need to do this to submit your VAT Return online, whether you choose to use commercial software or HMRC’s free online service.)
- Talk to your accountant if they will be submitting your VAT Return online on your behalf and discuss what you both need to do, to ensure you meet the deadline for your first online return.
- Consider whether you need to change any of your business processes for checking and signing off your VAT Return.
- Identify your preferred form of electronic payment (eg Direct Debit, internet banking, etc) and set up the necessary arrangements. There are lots of electronic payment methods to choose from.
- If your business has to pay your VAT by cheque, make sure you order from HMRC the necessary Bank Giro paying-in slips (preprinted with your and HMRC details), which you will use when paying in your cheque at a participating bank or building society. For more information on how to order the paying-in slips see the link below ‘Read more about ordering Bank Giro paying-in slips’.
You might also want to set up the email reminder service (this is a free service which reminds you when your next online VAT Return is due). You set this up by filling in your email address on the ‘At a glance’ screen, once you have registered and enrolled for the VAT online service.
You can find more information at: http://www.hmrc.gov.uk/vat/vat-online/index.htm