Many VAT registered businesses will shortly be required to file their VAT returns online and pay their VAT electronically.
Who has to file online VAT returns?
From 1 April 2010 businesses that either
- have an annual turnover of £100,000 or more (exclusive of VAT) or
- register or should have registered for VAT on or after 1 April 2010 (regardless of turnover)
will have to submit VAT returns online and pay any VAT due electronically. If a business falls into either of the categories mentioned above, they will have to file all VAT Returns online (including nil and repayment returns) even if their turnover drops below £100,000 in the future.
Are there exemptions from filing VAT returns online and paying VAT electronically?
Not many. Businesses only will not have to submit VAT returns online or pay VAT electronically if either:
- the business is subject to an insolvency procedure (if it’s subject to an approved Voluntary Arrangement you may file online if you want to) or
- HMRC is satisfied that the business is run by individuals who have a religious conscience objection to using computers
What happens if a business’s turnover is less than £100,000
The business will not currently have to submit its VAT return online and pay VAT electronically if it registered for VAT before 1 April 2010 and its turnover stays below £100,000.
This may change in 2012, therefore businesses with turnover of less than £100,000 may like to consider filing online before it no doubt becomes mandatory.
How does a business file its 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 businesses complete their return or how the VAT is calculated.
To sign up for VAT online visit www.hmrc.gov.uk/vat/start/register/signup-online.htm
Alternatively the business may authorise an agent (such as us) to submit the return on its behalf.
How does a business get ready for the changes?
If a business thinks it will have to submit VAT returns online from 1 April 2010, the following action should be taken now:
- Identify the preferred form of electronic payment (eg Direct Debit, Internet / telephone banking, BACS Direct Credit, debit or credit card over the Internet (BillPay), CHAPS transfer, Bank Giro, standing order) and set up the necessary arrangements.
- Register and enrol for the VAT online service (this will need to be done to submit VAT returns online) or appoint an agent.
- Consider whether the business needs to change any business processes for checking and signing off VAT returns.