VAT returns
Your VAT return is worked out from your ledger: every invoice, bill, credit note, spend and receipt that carries VAT. The figures are the ones your books already hold. You prepare a return, check it, finalise it, and then record what you pay HMRC — or what HMRC repays you — when the money moves.
Note: Finalising a return doesn't send it to HMRC. Once you're connected to HMRC, you send a finalised return with Submit to HMRC on its page — see Submit a return to HMRC.
Dealing with HMRC needs your authenticator
HMRC asks every filing service how the person dealing with it confirmed who they are, so anything here that talks to HMRC needs your authenticator app. If you haven't set one up, turn it on under account settings first.
- Checking with HMRC: if you signed in with your authenticator, nothing more is asked. If you signed in without it, you're asked for its code once, and that lasts until you sign out. HMRC isn't asked while you enter the code: once it's confirmed, select Check with HMRC again. If you reset your authenticator, you're asked again. Starting a draft never asks HMRC anything, so it needs no code.
- Sending a return to HMRC: you confirm it with a code as you press submit, even if you signed in with your authenticator. A code checked at that moment is HMRC's answer for each submission.
- Each code works once. A code you've already used — to sign in, to confirm, or to submit — isn't accepted again: wait for your authenticator app to show the next code, then enter that one.
- A wrong code is refused, and counts toward your account's lockout as a wrong password does. After too many, wait a few minutes and try again.
Talking to HMRC also needs your browser to report a few facts about itself (HMRC's fraud-prevention rules), such as its screen size and time zone. They are collected as you press the button. If they don't arrive, HMRC isn't asked: reload the page and try again, and check that JavaScript isn't blocked for this site.
Connect to HMRC
Where filing with HMRC is switched on, the VAT Returns page shows whether your organisation is connected to HMRC. Connecting gives Sales Scribe your authority to deal with HMRC for your business's VAT.
- You need permission to file VAT returns. Anyone who may prepare them can see whether you're connected.
- Your organisation must be registered for VAT, with its nine-digit UK VAT registration number in its VAT details.
- Select Connect to HMRC. HMRC's sign-in page opens. Sign in with the Government Gateway user ID you use for your business's VAT, and grant the authority. You come back to the VAT Returns page, connected.
- If you decline on HMRC's page, nothing is connected and nothing changes.
- HMRC's authority lasts 18 months. The page shows the date by which HMRC will ask you to connect again.
- Disconnect forgets the authority here. HMRC keeps its own record of it: to remove the authority there too, use Manage authorised applications in your HMRC online account.
- If HMRC stops accepting the connection (its 18 months are up, or the authority was removed at HMRC), Sales Scribe forgets it and asks you to connect again.
- The connection is for the VAT number you had when you connected. You can still change the number in your VAT details, but HMRC isn't asked about the new one until you connect again.
- One organisation at a time is connected for a VAT number. If another organisation here is already connected for yours, connecting is refused before HMRC is asked: disconnect it there first, then connect here. You're told which organisation it is if you belong to it. Two organisations can still have the same VAT number in their details.
- A connection belongs to the HMRC service it was made with — HMRC's live service, or its test service. If Sales Scribe has moved to the other one since you connected, nothing is sent to HMRC and you're asked to connect again.
Check with HMRC: your VAT periods
Once you're connected, Check with HMRC asks HMRC for your VAT periods: the ones still open, and every one from the last year. Anyone who may prepare returns can check. The page then lists HMRC's periods, each with its due date and whether HMRC has received a return for it, and the return here that answers it.
- Your next return is HMRC's earliest open period. Its dates are HMRC's and can't be changed. Starting the draft uses your last check — it doesn't ask HMRC again — so check first if HMRC's periods may have changed. Any later open periods are listed too; each follows on from the one before.
- No matching HMRC period yet? If HMRC has nothing open for your next return (or you haven't checked), you can still prepare it here. It's matched to HMRC's period when you check with HMRC once HMRC opens it, and it can be submitted only once it's matched. Finalising such a return asks you to tick that you mean to — the finalise card says no HMRC period has its dates. If you meant HMRC's open period, select Check with HMRC first.
- A period matches a return here only if both its start and its end are the same. A return one day out doesn't match.
- Returns you finalised here and filed with HMRC some other way (before connecting, say) are matched to HMRC's received periods and marked Filed outside Sales Scribe, with the date HMRC received them. Nothing else about them changes.
- The Here column says what the return here is: Draft, Finalised, not yet submitted, Sent: answer not known, Submitted with the date, or Filed outside Sales Scribe. It's your return's own state, whatever HMRC's status for the period says — HMRC can take a little while to show a period as received.
- Each HMRC period is answered by one return here, never two.
When the dates don't line up, nothing is moved to fit. You're told what doesn't match, with HMRC's dates:
- Your next return starts on a different day from HMRC's earliest open period — for example, your periods are on a different stagger from HMRC's, or a period here was a non-standard length. Contact support with both dates.
- You moved your books here part-way through a VAT period, and the day you gave for it on your opening position is not the day HMRC's period begins. Correct that date on the opening position.
- HMRC may say whoever connected can't act for your VAT number. Connect again, signing in with the Government Gateway user ID that manages your business's VAT.
Before your first return
- Your organisation must be registered for VAT, with its VAT registration date set. See VAT registration and territory.
- Your first return starts no earlier than your registration date — or, if you moved your books here, the day your records here begin.
- If you moved here part-way through a VAT period and gave the date it began on your opening position, your first return starts that day and covers the whole period. It counts the output and input VAT you brought in for it, and shows box 6 and box 7 before the move as figures from your previous records — change those on the opening position, not on the return. See Move your books to Sales Scribe.
- Only the standard scheme is supported for now. A business on the flat-rate scheme or cash accounting is told so, rather than shown figures worked out on the wrong basis.
Prepare a return
- Go to Banking → VAT Returns (beside Year End).
- Under Start the first return (or Start the next return), check the dates and select Start the draft.
Connected to HMRC, it's Start the return for HMRC's VAT period, with HMRC's dates (see
Check with HMRC).
- The start is fixed for every return after the first: it is the day after the last one ended.
- A quarter is offered as the end; any length may be chosen, since monthly and annual returns exist.
- Open the draft to see its nine boxes.
A draft's figures are live: they are read from your ledger each time you open it, so a bill you post today changes them. Only one draft can be open at a time, because each return follows on from the last. Deleting a draft removes only the draft; nothing is posted until you finalise.
The nine boxes
| Box | What it holds |
|---|---|
| 1 | VAT due on sales and other outputs |
| 2 | VAT due on acquisitions of goods from EU member states (Northern Ireland) |
| 3 | Total VAT due: box 1 plus box 2 |
| 4 | VAT reclaimed on purchases and other inputs |
| 5 | Net VAT: what you pay HMRC, or what HMRC repays you |
| 6 | Total value of sales and other outputs, excluding VAT |
| 7 | Total value of purchases and other inputs, excluding VAT |
| 8 | Goods dispatched to EU member states, excluding VAT (Northern Ireland) |
| 9 | Goods acquired from EU member states, excluding VAT (Northern Ireland) |
Boxes 6 to 9 are in whole pounds: the lines are added up in pounds and pence, and the pence are then left out of the total. A Great Britain business files nil in boxes 2, 8 and 9. A Northern Ireland business enters boxes 8 and 9 when it finalises.
Entries with no document
Bad-debt relief, a partial-exemption adjustment, a fuel scale charge or a correction reaches the return one of two ways:
- a manual journal whose line says what it is on the return, dated when it happened — see Journals and your VAT return. The VAT summary lists every such line;
- an adjustment on the return itself (below), posted when the return is finalised. This is the way for a correction of an earlier return, because HMRC's limit on corrections is checked against it.
Adjust a box
Some figures belong on a return but in no posting line: a fuel scale charge, bad-debt relief, the annual partial-exemption adjustment, or the correction of an error on an earlier return. Add them to a draft under Adjustments:
- Choose the box — 1, 4, 6 or 7. Boxes 3 and 5 follow from the others; a Northern Ireland business enters boxes 8 and 9 when it finalises.
- Enter the amount to add, or less than nothing to take the box down: pounds and pence for boxes 1 and 4, whole pounds for 6 and 7.
- Say whether it is an adjustment or a correction of an earlier return. A correction also needs the last day of the VAT period the error arose in.
- Give the reason. It is kept with the return.
- For box 1 or box 4, choose the account it belongs to — motor expenses for a fuel scale charge, bad debts for bad-debt relief. Left blank, it goes to your VAT Adjustments account. If your chart has none, choose one.
A draft's adjustments change its figures but post nothing. Finalising posts the box 1 and box 4 adjustments — output or input VAT against the account you chose — and then moves them to VAT control with the rest of box 5. Reverting the return reverses those postings too; the adjustments stay on the draft, and finalising again posts them again. Boxes 6 and 7 are values, not VAT, so nothing is ever posted for them.
Corrections and HMRC's limit
HMRC lets you correct earlier errors on your next return only up to a limit (VAT Notice 700/45): the net value of the corrections — the box 1 corrections less the box 4 corrections — must be no more than £10,000, or no more than 1% of box 6 on this return, up to £50,000. Other adjustments don't count towards it.
When a draft's corrections pass the limit, the draft says so straight away, and it can't be finalised until they come off. Tell HMRC about them separately instead, with its online form Notification of errors in VAT returns, or by post. Errors made deliberately must always be told to HMRC that way, whatever their size. An error can be corrected for four years from the end of the period it arose in.
Note: When you notify HMRC separately, HMRC assesses the amount and you pay it outside any return. Recording that payment here isn't available yet.
Finalise a return
Open the draft and select Finalise, once its period has ended.
- The boxes are frozen. What you finalised is what the return says from then on; it is never worked out again.
- The VAT moves to VAT control in one posting, dated the day you finalise: box 1 off your output VAT account, box 4 off your input VAT account, and the difference — box 5 — onto VAT control.
- Your books are not locked. A line dated inside the period and posted afterwards — a late supplier bill, a void — is picked up by your next return, and shown there as a late adjustment. To stop anything being dated into a period, use the posting lock.
A return can't be finalised while a posting that carries VAT is waiting in the list of parked postings (in Accounting settings) for its period: replay or dismiss it first, or its VAT would be missing from the return.
Pay HMRC, or record a repayment
When a return says you owe VAT, pay HMRC from your bank as you normally would, then record the payment on the return: the date the money left, the bank account and the amount.
Recording the payment here says the money left the bank; it doesn't pay HMRC.
When a return says HMRC owes you, record HMRC's repayment the same way once it arrives in your bank.
- You can pay in instalments, but never more than the return says.
- A payment is dated after the return's period, and goes through one of your own bank accounts in pounds — never cash, a card or Stripe clearing.
- A payment to HMRC posts Dr VAT control / Cr bank; a repayment posts the reverse.
- A payment entered in error is voided, with a reason. Its posting is reversed on its own date, and the return is owed again.
VAT control is the one account only a return may touch: spend money, receive money and journals are refused on it. The control reconciliation checks it — finalised returns, less what has been paid, plus what has been repaid.
VAT from before you moved your books here
If your opening balances stated VAT owed on VAT control — for returns you filed from your previous records — the VAT Returns page shows it: what was brought in, what has been paid and what is left. Record the payment against it in the same way, dated after your records here begin.
While money stands against that VAT, your opening position can't be reopened: void those payments first.
Submit a return to HMRC
Once you're connected to HMRC and a finalised return is matched to HMRC's period, its page offers Submit to HMRC. You need permission to file VAT returns.
Read HMRC's declaration and tick the box to confirm it. HMRC won't accept a return without it, and the box is never ticked for you:
When you submit this VAT information you are making a legal declaration that the information is true and complete. A false declaration can result in prosecution.
An accountant filing for a client through their practice sees HMRC's agent declaration instead:
I confirm that my client has received a copy of the information contained in this return and approved the information as being correct and complete to the best of their knowledge and belief.
Enter the code your authenticator app shows now — every time, even if you signed in with it.
Select Submit to HMRC.
When HMRC has it, the page shows HMRC's receipt: when HMRC processed it, its form bundle number, how payment is handled (DD: HMRC holds a Direct Debit for what you owe; BANK: HMRC holds your bank details for what it owes you), the charge reference if you owe VAT, and HMRC's receipt ID and timestamp. The receipt is kept as HMRC sent it and never changes. A submitted return can't be changed, reverted or sent again; correct any error through your next return, as a correction.
If HMRC's answer doesn't arrive — no reply in time, a lost connection, or HMRC failing — the return may or may not be at HMRC, so it's never sent again on its own. The page says so and offers Check with HMRC, which asks HMRC what it holds for the period:
- HMRC has this return (the same figures): it's recorded as submitted.
- HMRC has a return for the period with different figures: this one wasn't filed from here, so it's marked as filed outside Sales Scribe. Correct any difference through your next return.
- HMRC has no return and the period is still open: it hasn't arrived, and you can submit it again.
- HMRC has no return it can show, yet the period isn't open any more: it stays unconfirmed. Check your HMRC online account, or ask HMRC.
HMRC may refuse a submission. If HMRC says it already has a return for the period, the return is checked the same way (above). If HMRC says the period hasn't ended, submit it once it has. If HMRC refuses it for any other reason, it doesn't have it, and that's a fault in Sales Scribe: contact support quoting the code shown. If HMRC can't be reached at all, nothing was sent: try again in a few minutes.
Correct a finalised return
Select Revert on a finalised return to turn it back into a draft, with your reason kept. Its transfer to VAT control is reversed, dated the day you revert, and its lines become the draft's again.
- Only the latest finalised return can be reverted; revert the later one first.
- A return with payments against it can't be reverted until they are voided.
- Once HMRC has received a return, it can't be reverted. Corrections go through your next return.
Who can do what
- Prepare VAT returns — see the returns, start or delete a draft, and check HMRC's VAT periods.
- File VAT returns — finalise and revert returns, record or void payments to and from HMRC, connect to HMRC, submit a return and check with HMRC whether it has one. Every one of these changes your books or what HMRC holds, so someone who may prepare a return may not necessarily file it.