When a company’s turnover (sales) reaches or exceeds a certain threshold, it must register for VAT with HMRC, charge VAT on any sales it makes, and submit a quarterly VAT return. The threshold is currently set at £85,000 for the 2020/21 financial year, but it does change annually.

How to Calculate VAT Return: A VAT return is completed based on the information contained in the company’s bookkeeping system. This includes:

• The total sales made by the company broken down into the net figure and the VAT amount (the output VAT) and
• The total purchases made by the company, again broken down into a net figure and the VAT amount (the input VAT)

Subtracting your company’s input VAT from its output VAT will result in a sum that is due to be paid to HMRC. If your input VAT is higher than your output VAT, the company will be due a refund from HMRC.

There are several options for filing your VAT Returns. Companies can:

• File their quarterly VAT returns online via the HMRC VAT website
• Use the services of an accountant to prepare a VAT return every three months
• Order the 121 Company Formation Accounting Services package to have us professionally and seamlessly prepare and file your VAT Return

121 Company Formation is an experienced accounting firm that specializes in offering a range of services to start-ups, small and medium sized companies including offering sound business advice, assisting in running their operations in the most tax efficient way, preparing their year-end accounts , and preparing and filing their VAT Returns.