VAT returns reconciled to the bookkeeping, then filed.
We reconcile the quarter before we file it, review the scheme once a year, and give you the payment figure with time to move the money.
- The quarter reconciled before it is filed
- Ratios reviewed the way HMRC reviews them
- Filed under MTD with digital links
- The payment figure a week ahead
- Your scheme reviewed once a year
VAT returns
VAT is the tax most likely to generate an assessment, because it is filed nine times more often than the accounts and every return is a chance to get something wrong. Most of the errors we see are the same handful: reclaiming on an invoice that is not addressed to the business, treating a deposit as outside the scope, missing the point at which the flat rate scheme stopped paying, and the ones that come from bookkeeping that was rushed to hit the deadline.
We reconcile before we file. The return agrees to the bookkeeping, the bookkeeping agrees to the bank, and anything that does not fit gets asked about rather than coded to a suspense account.
What happens each quarter
- 1Bookkeeping brought up to date
We bring the quarter’s bookkeeping up to date before preparing the return.
- 2The return reviewed before it goes
We look at the ratios: input tax against purchases, output tax against sales, and anything that has moved sharply since last quarter. HMRC reviews the same ratios.
- 3Filed through MTD-compatible software
Digital records with a digital link all the way to the return, as Making Tax Digital requires. Figures copied by hand from a spreadsheet do not meet that requirement.
- 4The payment figure, with time to pay it
You know the number a week before it leaves the account.
- 5The scheme reviewed once a year
Flat rate, cash accounting, annual accounting, margin schemes. The right scheme changes as the business changes, so we check it each year.
Key figures
These are the registration threshold, the deadlines and the flat rate for limited cost traders.
2026/27 figures. See key tax dates and the calculators for the full picture.
Common VAT mistakes
- Bookkeeping rushed to meet the return
- A quarter rushed into shape the week the return is due is full of guesses. The return should be the last step in a closed period.
- Reclaiming on the wrong evidence
- An invoice addressed to you personally, a receipt without a VAT number, a pro-forma. None of these supports a reclaim, and invoices are the first thing an officer asks to see.
- The scheme set once and never revisited
- Flat rate, cash accounting, annual accounting, margin schemes. The right scheme changes as the business changes.
- Deposits and stage payments
- A tax point is not always the invoice date. Deposits, stage payments and continuous supplies each have their own rule, and getting it wrong shifts VAT into the wrong quarter in both directions.
- Crossing the threshold without noticing
- The £90,000 test runs on any rolling twelve-month period, so your accounting year does not come into it. Cross it unknowingly and you owe VAT on sales you never charged it on, out of your own margin.
Flat rate scheme or standard VAT accounting
£120,000 of sales, a service business with few purchases
A consultancy on the flat rate scheme at the limited cost trader rate, with about £18,000 of VAT-bearing purchases in the year.
- Sales excluding VAT
- £120,000
- VAT charged to customers at 20%
- £24,000
- FLAT RATE — 16.5% of the gross £144,000
- £23,760
- STANDARD — output VAT less input VAT on £18,000 of purchases
- £21,000
- Input VAT given up by staying on the flat rate
- £3,000
- The flat rate scheme costs you
- £2,760 a year
The limited cost trader rules put most service businesses on 16.5%, at which rate the flat rate scheme is usually the more expensive option.
Worked through at 2026/27 rates from our own calculators, which follow gov.uk guidance checked in July 2026. This is an example and your figures will differ.
VAT registration
Registration is compulsory once taxable turnover in any rolling twelve months passes £90,000, or if you expect to pass it in the next thirty days alone. The test runs on any rolling twelve months, whatever your financial year.
Voluntary registration below the threshold can be worth it if you sell mainly to VAT-registered businesses and buy a lot: you reclaim VAT on purchases, and your customers reclaim the VAT you charge. It is usually wrong if you sell to the public, because your prices go up by a fifth.
If you are close to the threshold, talk to us before you cross it. See the VAT registration guide.
What people ask about vat returns
When are VAT returns due?
One calendar month and seven days after the end of the VAT period, for both the return and the payment, unless you are on annual accounting or a payment-on-account arrangement. Direct debit collects three working days later.
What is the VAT registration threshold?
£90,000 of taxable turnover in any rolling twelve-month period. You must also register if you expect to exceed it in the next thirty days on its own.
Do I have to use software?
Yes. Making Tax Digital for VAT applies to every VAT-registered business regardless of turnover: digital records and a digital link through to the return. Typing figures from a spreadsheet into HMRC's website is not compliant.
Can you deal with a VAT inspection?
Yes. We handle the correspondence, prepare what the officer asks for and are there for the visit. Records that reconcile make an inspection go more smoothly.
What if I have made a mistake on an earlier return?
Errors under the reporting threshold can usually be adjusted on the next return; larger ones are disclosed separately. Disclosing before HMRC finds it materially reduces the penalty, and in some cases removes it.
