Value Added Tax Returns, Refunds, and Payments

As a business owner or joint owner, you may have had to register or voluntarily registered for value added tax, or VAT. If so, you will need to consider how value added tax returns, refunds, and payments must be handled. Most of this can be conveniently and securely taken care of online, and, starting in 2010, for those businesses whose turnover exceeds £100,000 or who have newly registered for value added tax, returns and payments will be required to be submitted electronically.

Completing Your VAT Tax Returns Online

There are a number of advantages to filing your value added tax return via the World Wide Web, compared to sending it through the post to the HMRC, or Her Majesty’s Revenue and Customs department. Obviously, filing your return online is much quicker and much easier than dealing with the complexities of the post. Your return is submitted instantly, and your refund can be paid electronically with no postal delays whatsoever. Secondly, by filling out your return online, you are assisted by various real time guides which will quickly take you through the process, instead of forcing you to second guess yourself.

Errors are also minimised in this manner, which, except for your own breaches of honesty or inaccuracy, renders it nearly impossible for you to experience delays due to disparities on your return, and less likely for you to incur penalties as well.
The immediacy of the processing of your return will also guarantee that you are sent your VAT refund, if you are eligible for one, much sooner than you would if you dealt only with the post.

Electronic submissions are also given plenty of extra time in terms of submission, allowing seven extra calendar days for both return submission and any required payment on your part. In terms of payment, three days are given after the date of your payment transaction before the money is actually lifted from your account, which can buy you a bit of extra time, a thing most of us so desperately need in this day and age.

Minimal Security Concerns

Security is not an issue you will need to concern yourself with once having filed your return online. Every transaction takes place over a secure network, and only you and the HMRC will have any notion as to the information you have submitted. Once your submission has gone through correctly, you will receive swift acknowledgement, as well as a reference number which can be used to track down your return, view your recent payment and refund history, and the status of your pending refund or payment, if any.

Of course, to begin all of this you must first obviously register for VAT, and then subsequently register for a VAT online account. Registration for VAT proper is covered elsewhere, and here we will discuss registration for the VAT online account. Requiring only five brief steps, registration is simple and quick. If you happen to be registered with any other HMRC or UK Government Gateway organisations, simply adding VAT to your account is all that must be done. To do this, simply access whatever service it is, for which you are already registered, and select to enrol in the VAT program. After that it is only a matter of following the instructions provided.

Registration, on the other hand, involves accepting the given terms and conditions, filling out your name and email address, creating a password, recording your User ID, which will be provided for you, and filling out any pertinent information regarding you and your VAT account.

An Online PIN is recommended for access to other VAT services, although it is not required if you would just like to file your return. Once having set up your VAT account, you will receive an Online PIN number within a week. Keep in mind that this PIN will expire within 28 days of non use after receipt of the notification.

What If A Repayment Is Due?

As for repayment, the process by which this occurs is an elementary one. Once your return has been submitted, the date of submission is logged by the HMRC, at which point it is then checked for credibility and accuracy. As long as your return passes this credibility check, it is immediately passed through for assessment of payment. If your return does not pass the check, however, it is reviewed manually. If there are still issues with processing, audit centres are assigned and will look into the return as soon as possible. As long as everything is resolved and you are still found to be eligible for a refund, you are paid by a direct depositing into your bank account.

Usually, 90 per cent of all correct payment returns are processed and repaid within 10 days of receipt by the HMRC. Fortunately, if your return has been submitted for 30 calendar days and you still have not received payment, then you are additionally entitled to extra payment to make up for the delay. The standard for this is of either 5 per cent of the amount you are eligible for on your return, or £50, whichever happens to be greater. This amount can be even greater if your payments have been delayed even longer.

If You Have To Make A Payment

If your output tax happens to exceed your input tax instead, and you are required to pay extra money to the HMRC, it is as simple a process, though not nearly as satisfying, as obtaining a refund. It is recommended that this is also carried out electronically, as the seven and three day extensions mentioned above still apply.

After having registered for VAT online, the easiest way to pay is via DD, or direct debit instruction. This will allow the HMRC to debit payments directly from your bank account, under the code “HMRC VAT”. After this is properly done, you are not required to take any further action. It is also possible to submit returns manually through the post, by telephone, or a number of other methods.

Above all, be sure that you keep superb and accurate records of every value added tax invoice and any other related transactions, as this greatly expedites your chance of receiving a speedy refund or, unfortunately, the swiftness with which you will be able to pay off what you owe to the HMRC.