Guide summary

Send a return for each accounting period, even if you have no VAT to pay or reclaim
Keep a proper VAT invoice for each purchase, or you cannot claim the VAT on it
Check your figures before you submit, because you cannot amend a return once it has been sent
If your records are in spreadsheets, use bridging software to send them to HMRC
Make sure your payment reaches HMRC's bank account by the deadline, even on a weekend or bank holiday
Set up a Direct Debit at least 3 working days before you submit the return
Correct errors of £10,000 or less on your next return; report larger or deliberate errors to HMRC separately
Paying 16 to 30 days late brings a 3% penalty on the VAT you owed at day 15

You send a VAT return for each accounting period, usually every three months, even if you have no VAT to pay or reclaim. Software compiles the figures from your digital records and fills in the boxes, so your job is to keep the records right and check what it shows before you submit.

Get your records ready

Make sure every sale and purchase for the period is recorded, together with the credit notes you issued and received. You cannot claim input VAT on a purchase unless you hold a proper VAT invoice for it.

What goes in each box

Boxes 1 to 5 hold VAT amounts. Boxes 6 and 7 hold the values of your sales and purchases without VAT.

Boxes 1 to 7 of the VAT return

Box	What to put in	What to take off or leave out
1. VAT due on sales and other outputs	The VAT due on everything you supplied in the period. This includes goods taken for private use, sales of business assets, supplies to staff, gifts of goods that cost you more than £50 without VAT, commission you received and VAT due under the reverse charge.	VAT on credit notes you issued, and amounts HMRC has notified to you as assessments.
3. Total VAT due	Box 1 plus box 2. Your software works it out.	Nothing.
4. VAT reclaimed on purchases and other inputs	The VAT you can reclaim on business purchases, backed by a proper VAT invoice. This includes VAT you paid under the reverse charge, VAT on imports accounted for through postponed VAT accounting, and bad debt relief.	VAT on goods bought wholly for personal use, business entertainment, and second-hand goods bought under a margin scheme, and VAT on credit notes issued to you. If you are partly exempt, the partial exemption rules limit what you can reclaim.
5. Net VAT to pay or reclaim	Box 3 less box 4. If box 3 is bigger, you pay the difference. If box 4 is bigger, HMRC credits your account and repays the balance, subject to any enquiries.	Instalments paid under the Annual Accounting Scheme. Take them off the amount you pay with the annual return, not out of box 5.
6. Total value of sales and all other outputs, without VAT	Everything you sold, including zero-rated, reduced-rate and exempt supplies, exports, reverse charge transactions, supplies outside the scope of UK VAT and deposits you have invoiced.	Money you put into the business, loans, dividends and gifts of money, insurance claims and Stock Exchange dealings.
7. Total value of purchases and all other inputs, without VAT	Your purchases and expenses, including imports and reverse charge purchases.	Wages and salaries, PAYE and National Insurance, money you take out of the business, loans, dividends, gifts of money, insurance claims, MOT certificates, vehicle licence duty, local authority rates and other spending outside the scope of VAT.

If you use a special scheme

The Flat Rate Scheme and cash accounting change how you complete boxes 1, 4, 6 and 7, and a margin scheme changes boxes 1, 6 and 7. Under cash accounting, those boxes follow the payments you have made and received, not the invoices. Under the reverse charge, the supplier reports the value in box 6, and the customer shows the VAT in box 1, claims it in box 4 and reports the purchase in box 7, with box 6 as well for gold and international services. If you pay VAT payments on account, do not adjust the return. Pay the net liability less what you have already paid.

VAT return boxes 8 and 9 (Northern Ireland)

How Northern Ireland businesses complete boxes 8 and 9 of the VAT return.

Box 8: Supplies of goods to EU member states, excluding VAT
Box 9: Acquisitions of goods from EU member states, excluding VAT
Box 8 also in: Box 6
Box 9 also in: Box 7

If you are in Northern Ireland, the value of goods you dispatch to EU member states goes in box 8 and must also be included in the box 6 total. The value of goods you acquire from EU member states goes in box 9 and must also be included in the box 7 total. Leaving them out of boxes 6 and 7 is a common error.

How to fill in and submit your VAT Return (VAT Notice 700/12) (opens in a new tab)

Submit the return and pay

Check your figures against your VAT account

If all your sales are standard-rated, box 1 should be 20% of box 6. You cannot amend a return once it has been sent.
Submit the return through Making Tax Digital software

If your records are in spreadsheets, bridging software can send them to HMRC. The deadline is usually one calendar month and 7 days after the accounting period ends, or 2 months for the annual return under the Annual Accounting Scheme.
Pay HMRC by the same deadline

Your payment must reach HMRC's bank account by then, even if it falls on a weekend or bank holiday. Your VAT online account shows each deadline.

To pay by Direct Debit, set it up at least 3 working days before you submit the return. HMRC then collects the payment 3 working days after the payment deadline. Faster Payments usually arrive the same or next day and CHAPS the same working day, but Bacs takes 3 working days. HMRC does not use your Direct Debit details for repayments, so add your bank details to your VAT online account or it will send a cheque.

If you find a mistake

Common VAT return errors to avoid

Frequent mistakes on VAT returns and how to put them right.

VAT in boxes 6 to 9: Enter figures excluding VAT
Blocked input tax: Leave business entertainment and personal-use goods out of box 4
Missing invoices: Keep a proper VAT invoice to claim input tax
Wrong tax point: Account in the period of the tax point, unless you use Cash Accounting
Zero-rated sales: Include exports and other zero-rated sales in box 6
Reverse charge: Account for the VAT in box 1 and, if reclaimable, box 4
Cash Accounting: Base boxes 6 and 7 on payments received and made

Correcting errors

You can correct net errors on your next VAT return if they are £10,000 or less, or between £10,000 and £50,000 and no more than 1% of your box 6 figure for the return period in which you discover them. Larger errors, and any deliberate error, must be reported to HMRC separately with an error correction notification.

The time limit for correcting errors is 4 years. It does not apply to deliberate errors.

How to fill in and submit your VAT Return (VAT Notice 700/12) (opens in a new tab)

How to correct VAT errors and make adjustments or claims (VAT Notice 700/45) (opens in a new tab)

If you are late

VAT late submission penalties

Points-based penalty system for late VAT returns, including point thresholds by filing frequency and penalty amounts.

From 1 January 2023, HMRC uses a points-based penalty system for late VAT returns. Each late submission adds a penalty point to your account. When you reach the threshold for your filing frequency, you receive a £200 penalty and continue to receive £200 for each subsequent late submission until points are reset.

Penalty amount (at threshold): £200 per late submission
Points threshold (annual returns): 2 points
Points threshold (quarterly returns): 4 points
Points threshold (monthly returns): 5 points
Points reset period (annual returns): 24 months of timely submissions after reaching threshold
Points reset period (quarterly returns): 12 months of timely submissions after reaching threshold
Points reset period (monthly returns): 6 months of timely submissions after reaching threshold
Effective date: VAT periods starting on or after 1 January 2023

How points accumulate

You receive one penalty point for each VAT return submitted late. Points accumulate separately from financial penalties:

Below threshold: No financial penalty, but points remain on your record
At threshold: £200 penalty for the late return that triggered the threshold
Above threshold: £200 for every subsequent late return until points reset

Resetting points to zero

To reset your points after reaching the threshold, you must:

Submit all outstanding returns
Submit all returns on time for the required compliance period: 24 months for annual returns, 12 months for quarterly returns or 6 months for monthly returns

If you have not reached the threshold, points expire 24 months after they were incurred (provided you have no further late submissions).

Penalty points and penalties if you submit your VAT return late (opens in a new tab)

VAT late payment penalties

Late payment penalties and interest for VAT: no penalty for 15 days, then a first penalty of 3% at day 15 and 3% at day 30, and a second penalty at 10% a year from day 31.

For VAT accounting periods starting on or after 1 January 2023, paying VAT late brings two separate late payment penalties as well as late payment interest. This is separate from the points-based penalties for late returns.

Applies to: VAT accounting periods starting on or after 1 January 2023
Up to 15 days late: No penalty (interest runs from day 1)
16 to 30 days late: 1st penalty: 3% of VAT outstanding at day 15
31 days or more late (1st penalty): 3% at day 15 plus 3% at day 30 (6% in total)
31 days or more late (2nd penalty): 10% a year, calculated daily on the balance
Periods starting before 1 April 2025: 2% at day 15, 2% at day 30, 4% a year
Late payment interest: Bank of England base rate plus 4% (from 6 April 2025)
Interest runs: From the day after the due date until paid in full

First late payment penalty

A fixed charge based on the VAT still unpaid:

Paid within 15 days: no penalty
Paid between 16 and 30 days: 3% of what you owed at day 15
Paid after 30 days: 3% of what you owed at day 15 plus 3% of what you owed at day 30

Second late payment penalty

A daily charge at an annual rate of 10% of the outstanding balance, from day 31 until the VAT is paid in full. It is in addition to the first penalty. For example, a business that pays £15,000 of VAT 51 days late pays a first penalty of £900 (3% of £15,000 twice) and a second penalty of £86.30 (£15,000 × 10% × 21 ÷ 365), £986.30 in total.

These rates apply to VAT for accounting periods starting on or after 1 April 2025. For earlier periods the first penalty is 2% at day 15 and 2% at day 30, and the second penalty is 4% a year.

A Time to Pay arrangement agreed with HMRC can mean lower or no late payment penalties. If it is cancelled because the conditions are not kept, HMRC charges both penalties as if there had been no arrangement.

Late payment interest

Interest is charged from the first day the payment is overdue until it is paid in full, at the Bank of England base rate plus 4% (since 6 April 2025). It is separate from penalties and also applies to overdue penalties.

Interest calculation: Daily on the amount outstanding
Interest start date: Day after the payment due date
Objecting to interest: Only if HMRC made a mistake or delayed unreasonably, once the tax is paid

How late payment penalties work if you pay VAT late (opens in a new tab)

Late payment interest if you do not pay VAT or penalties on time (opens in a new tab)

Legal basis

Primary legislation and key regulations

Finance Act 2021 Primary 2021 · UK-wide Value Added Tax Act 1994 Primary 1994 · UK-wide Value Added Tax Regulations 1995 SI 1995 · UK-wide The Finance Act 2021 (Increase in Schedule 26 Penalty Percentages) Regulations 2025 SI 2025 · UK-wide

Browse UK legislation legislation.gov.uk

Official guidance

Bad debt relief (VAT Notice 700/18) (opens in a new tab)

HMRC

How to fill in your VAT return (VAT Notice 700/12) (opens in a new tab)

HMRC

Pay your VAT bill (opens in a new tab)

HMRC

Submit your VAT return (opens in a new tab)

HMRC

Find MTD-compatible software for VAT (opens in a new tab)

HMRC

How to correct VAT errors (Notice 700/45) (opens in a new tab)

HMRC

Complete your VAT return

Get your records ready

What goes in each box

If you use a special scheme

Submit the return and pay

Check your figures against your VAT account

Submit the return through Making Tax Digital software

Pay HMRC by the same deadline

If you find a mistake

If you are late

Legal basis

Official guidance

Next steps

Growing your business

Start importing goods to the UK

Transfer ownership of your business

Related guides in Tax & Finance

Correct VAT return errors

Reclaim VAT on business purchases

Use VAT Cash Accounting

Join the VAT Flat Rate Scheme

Comply with Making Tax Digital for VAT