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B11: VAT returns
Obligation to submit VAT returns
"(1) Every person who is registered or was or is required to be registered shall, in respect of every period of a quarter or in the case of a person who is registered, every period of 3 months ending on the dates notified either in the certificate of registration issued to him or otherwise, not later than the last day of the month next following the end of the period to which it relates, make to the Controller a return in the manner prescribed in regulation 25A showing the amount of VAT payable by or to him and containing full information in respect of the other matters specified in the form and a declaration, signed by that person or by a person authorised to sign on that person's behalf, that the return is correct and complete;
provided that—
(a) the Commissioners may allow or direct a person to make returns in respect of periods of one month and to make those returns within one month of the periods to which they relate;
(b) the first return shall be for the period which includes the effective date determined in accordance with Schedules 1, 1A, 2, 3 and 3A to the Act upon which the person was or should have been registered, and the said period shall begin on that date;
(c) where the Commissioners consider it necessary in any particular case to vary the length of any period or the date on which any period begins or ends or by which any return shall be made, they may allow or direct any person to make returns accordingly, whether or not the period so varied has ended;
(d) where the Commissioners consider it necessary in any particular case, they may allow or direct a person to make returns to a specified address.
(2) Any person to whom the Commissioners give any direction in pursuance of the proviso to paragraph (1) above shall comply therewith." (SI 1995/2518, r.25(1) - (2))
​
Annual returns
"(1) The Commissioners may, subject to the requirements of this Part, authorise a taxable person to pay and account for VAT by reference to any transitional accounting period, and any subsequent current accounting year at such times, and for such amounts, as may be determined in accordance with the scheme.
(2) A taxable person authorised to pay and account for VAT in accordance with the scheme shall—
[...]
(b) make by the last working day of the second month following the end of that current accounting year a return in respect of that year, together with any outstanding payment due to the Commissioners in respect of his liability for VAT for the current accounting year declared on that return." ​(SI 1995/2518, r.50)
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Eligibility
​
"(1) A taxable person shall be eligible to apply for authorisation under regulation 50(1) if—
(a) …
(b) he has reasonable grounds for believing that the value of taxable supplies made or to be made by him in the period of 12 months beginning on the date of his application for authorisation will not exceed £1,350,000;
(c) his registration is not in the name of a group under section 43(1) of the Act;
(d) his registration is not in the name of a division under section 46(1) of the Act; and
(e) he has not in the 12 months preceding the date of his application for authorisation ceased to operate the scheme.
(1A) …
(2) The Commissioners may refuse to authorise a person under regulation 50(1) where they consider it necessary to do so for the protection of the revenue." (SI 1995/2518, r.52)
​
Payment of VAT
​
See D5: Payment of VAT
​
Transitional period return
​
"An authorised person shall, where in any given case the transitional accounting period is—
(a) 4 months or more—
[...]
(iii) make by the last working day of the second month following the end of his transitional accounting period a return in respect of that period, together with any outstanding payment due to the Commissioners in respect of his liability for VAT declared on that return; or
(b) less than 4 months, make by the last working day of the first month following the end of his transitional accounting period a return in respect of that period, together with any outstanding payment due to the Commissioners in respect of his liability for VAT declared on that return." (SI 1995/2518, r.51)
​
Cessation of authorisation
​
"(1) An authorised person shall continue to account for VAT in accordance with the scheme until he ceases to be authorised.
(2) An authorised person ceases to be authorised when—
(a) at the end of any transitional accounting period or current accounting year the value of taxable supplies made by him in that period or, as the case may be, year has exceeded £1,600,000; or
(b) his authorisation is terminated in accordance with regulation 54 below;
(c) he—
(i) becomes insolvent and ceases to trade, other than for the purpose of disposing of stocks and assets; or
(ii) ceases business or ceases to be registered; or
(iii) dies, becomes bankrupt or incapacitated;
(d) he ceases to operate the scheme of his own volition." (SI 1995/2518, r.53)
​
Termination of authorisation
​
"(1) The Commissioners may terminate an authorisation in any case where—
(a) a false statement has been made by or on behalf of an authorised person in relation to his application for authorisation; or
(b) an authorised person fails to make by the due date a return in accordance with regulation 50(2)(b) or regulation 51(a)(iii) or (b); or
(c) an authorised person fails to make any payment prescribed in regulation 50 or 51; or
(d) where they receive a notification in accordance with paragraph (2) below; or
(e) at any time during an authorised person's transitional accounting period or current accounting year they have reason to believe, that the value of taxable supplies he will make during the period or as the case may be year, will exceed £1,600,000; or
(f) it is necessary to do so for the protection of the revenue; or
(g) an authorised person has not, in relation to a return made by him prior to authorisation, paid to the Commissioners all such sums shown as due thereon; or
(h) an authorised person has not, in relation to any assessment made under either section 73 or section 76 of the Act, paid to the Commissioners all such sums shown as due thereon.
(2) Where an authorised person has reason to believe that the value of taxable supplies made by him during a transitional accounting period or current accounting year will exceed £1,600,000, he shall within 30 days notify the Commissioners in writing." (SI 1995/2518, r.54)
​
Date of cessation is effective
​
"(1) The date from which an authorised person ceases to be authorised in accordance with Regulation 53(2) shall be—
(a) where regulation 53(2)(a) applies, the day following the last day of the relevant transitional accounting period or current accounting year;
(b) where regulation 53(2)(b) applies, the day on which the Commissioners terminate his authorisation;
(c) where regulation 53(2)(c) applies, the day on which any one of the events mentioned in that paragraph occurs; and
(d) where regulation 53(2)(d) applies, the date on which the Commissioners are notified in writing of the authorised persons decision to cease using the scheme.
(2) Where an authorised person ceases to be authorised, he or as the case may be, his representative, shall—
(a) if his authorisation ceases before the end of his transitional accounting period or current accounting year, make a return within 2 months of the date specified in paragraph (1)(b), (1)(c) or (1)(d) above, together with any outstanding payment due to the Commissioners in respect of his liability for VAT for that part of the period or year arising before the date he ceased to be authorised; or
(b) if his authorisation ceases at the end of his transitional accounting period or current accounting year, make a return together with any outstanding payment due to the Commissioners in respect of his liability for VAT in accordance with regulation 51 or 50 above; and
in either case, from the day following the day on which he ceases to be authorised, account for and pay VAT as provided for otherwise than under this Part." (SI 1995/2518, r.55)
​
VAT returns by persons acting in representative capacity
"(3) Where for the purposes of this Part the Commissioners have made a requirement of any person pursuant to regulation 30—
(a) the period in respect of which taxable supplies were being made by the person who died or became incapacitated shall end on the day previous to the date when death or incapacity took place; and
(b) subject to sub-paragraph (1)(c) above, a return made on his behalf shall be made in respect of that period no later than the last day of the month next following the end of that period; and
(c) the next period shall start on the day following the aforesaid period and it shall end, and all subsequent periods shall begin and end, on the dates previously determined under paragraph (1) above." (SI 1995/2518, r.25(3))
​
VAT statement where goods sold by creditor to satisfy debt
"Where goods are deemed to be supplied by a taxable person by virtue of paragraph 7 of Schedule 4 to the Act, the auctioneer on a sale by auction or, where the sale is otherwise than by auction, the person selling the goods, shall, whether or not registered under the Act, within 21 days of the sale—
(a) furnish to the Controller a statement showing—
(i) his name and address and, if registered, his registration number,
(ii) the name, address and registration number of the person whose goods were sold,
(iii) the date of the sale,
(iv) the description and quantity of goods sold at each rate of VAT, and
(v) the amount for which they were sold and the amount of VAT charged at each rate,
(b) pay the amount of VAT due, and
(c) send to the person whose goods were sold a copy of the statement referred to in sub-paragraph (a) above, and the auctioneer or person selling the goods, as the case may be, and the person whose goods were sold shall exclude the VAT chargeable on that supply of those goods from any return made under these Regulations." (SI 1995/2518, r.27)
​
Final VAT returns
"(4) Any person who—
(a) ceases to be liable to be registered, or
(b) ceases to be entitled to be registered under either or both of paragraphs 9 and 10 of Schedule 1, paragraph 4 of Schedule 2 or paragraph 4 of Schedule 3 to the Act,
shall, unless another person has been registered with his registration number in substitution for him under regulation 6, make to the Controller a final return in the manner prescribed in regulation 25A and any such return shall contain full information in respect of the matters specified in the form and a declaration, signed by that person or by a person authorised to sign on that person's behalf, that the return is correct and complete and shall be made, in the case of a person who was or is registered, within one month of the effective date for cancellation of his registration, and in the case of any other person, within one month of the date upon which he ceases to be liable to be registered, and in either case shall be in respect of the final period ending on the date aforementioned and be in substitution for the return for the period in which such date occurs." (SI 1995/2518, r.25(4))
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Content of VAT return
​
"(1) Any person making a return shall in respect of the period to which the return relates account in that return for—
(a) all his output tax,
(aa) all VAT which he is required to pay on behalf of the supplier.
(b) all VAT for which he is accountable by virtue of Part XVI of these Regulations,
(c) all VAT which he is required to pay as a result of the removal of goods from a fiscal warehousing regime, and
(d) all VAT which he is required to pay as a result of a supply of specified services (performed on or in relation to goods at a time when they are subject to a warehousing regime) being zero-rated under section 18C(1) of the Act where—
(i) that warehousing regime is one where goods are stored without payment of any duty of excise,
(ii) those goods are subject to a duty of excise,
(iii) those goods have been the subject of an acquisition from another member State and the material time for that acquisition was while those goods were subject to that warehousing regime, and,
(iv) there was no supply of those goods while they were subject to that warehousing regime.
The amounts to be entered on that return shall be determined in accordance with these Regulations." (SI 1995/2518, r.40(1))
​
"(1) Where a person is required by regulations made under the Act to make a return to the Controller, the amounts to be entered on that return shall be determined in accordance with this regulation.
(2) In the box opposite the legend “VAT due in this period on sales and other outputs” shall be entered the aggregate of all the entries in the VAT payable portion of that part of the VAT account which relates to the prescribed accounting period for which the return is made, except that the total of the output tax due in that period on acquisitions from other member States shall be entered instead in the box opposite the legend “VAT due in this period on acquisitions from other EC member States”.
(3) In the box opposite the legend “VAT reclaimed in this period on purchases and other inputs” (including acquisitions from other member States) shall be entered the aggregate of all the entries in the VAT allowable portion of that part of the VAT account which relates to the prescribed accounting period for which the return is made." (SI 1995/2518, r.39)
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Permissible use of estimated figures
​
"Where the Commissioners are satisfied that a person is not able to account for the exact amount of output tax chargeable in any period, he may estimate a part of his output tax for that period, provided that any such estimated amount shall be adjusted and exactly accounted for as VAT chargeable in the next prescribed accounting period or, if the exact amount is still not known and the Commissioners are satisfied that it could not with due diligence be ascertained, in the next but one prescribed accounting period." (SI 1995/2518, r.28)
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Electronic filing
General obligation to use
​
"(2A) A person who is subject to the requirements of regulation 32A, including by virtue of an election in accordance with regulation 32C, must make a return required by regulation 25 using a compatible software return system.
(3) Subject to paragraphs (2A) above and (6) below, a person who is registered for VAT must make a return required by regulation 25 using an electronic return system that that person is required or authorised to use whether or not such a person is registered in substitution for another person under regulation 6 (transfer of a going concern).
(4) In any case where an electronic return system or a compatible software return system is not used, a return must be made using a paper return system." (SI 1995/2518, r.25A(2A) - (4))
​
Compatible software return system
​
"(A1) Where a person makes a return required by regulation 25 by means of electronic communications using functional compatible software, such a method of making a return shall be referred to in this Part as a “compatible software return system”" (SI 1995/2518, r.25A(A1))
​
"“functional compatible software” means a software program or set of compatible software programs the functions of which include—
(a) recording and preserving electronic records in an electronic form;
(b) providing information to HMRC from the electronic records and returns in an electronic form and by using the API platform; and
(c) receiving information from HMRC using the API platform in relation to a person's compliance with obligations under these Regulations which are required to be met by use of the software;" (SI 1995/2518, r.24)
​
Electronic return system
​
"(1) Where a person makes a return required by regulation 25 using electronic communications other than functional compatible software, such a method of making a return shall be referred to in this Part as an “electronic return system”." (SI 1995/2518, r.25A(1))
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Penalty for non compliance
​
See V5: Other penalties
​
Exception: incompatible with religion
​
"(6) A person—
(a) who the Commissioners are satisfied is a practising member of a religious society or order whose beliefs are incompatible with the use of electronic communications
[...]
is not required to make a return required by regulation 25 using an electronic return system" (SI 1995/2518, r.25A(6)(a))
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Unlawful discrimination against taxpayer
“I decided, relying on those rights, that for reasons explained in L H Bishop, the appellants in that case were discriminated against because the requirement to file online put them to an extra expense not suffered by persons who were not old/disabled/too remote. I also decided that that discrimination was outside the UK’s margin of appreciation on such matters and therefore unlawful because (a) the UK had given exemption to other classes of persons, such as those with religious objections and (b) the UK had itself recognised (by an unlawful telephone filing concession) that elderly/disabled/remote persons ought to have an exemption.” (Clements v. HMRC [2016] UKFTT 522 (TC), §19).
Not unlawful discrimination against taxpayer’s agent
“As I explained in Additional Aids, that reasoning is of no help to the appellants in these appeals. Firstly, there is no causation. In other words, Mr Clements has not suggested he would be put to extra expense if he was required to file online. On the contrary, it is clear that he pays Mr Bland to file his tax returns by paper. He could as easily instruct and pay a different agent to file his tax returns online…Firstly, the appellant lacks victim status so he cannot use his appeal to assert Mr Bland’s human rights. Secondly, to the extent that the requirement to file online indirectly discriminates against agents who are too old to be computer literate or too disabled to file online, this is clearly within the UK’s margin of appreciation because all agents are treated alike and, were the law to be otherwise, it would enable taxpayers to escape the obligation to file online by instructing agents who could not do so. For either reason, the appeal, relying on Mr Bland’s human rights, is bound to fail.” (Clements v. HMRC [2016] UKFTT 522 (TC), §§20…23).
Exception: insolvency procedures
​
"(6) A person—
[...]
(b) to whom an insolvency procedure as described in any of paragraphs (a) to (f) of section 81(4B) of the Act is applied, or
[...]
is not required to make a return required by regulation 25 using an electronic return system" (SI 1995/2518, r.25A(6)(b))
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Exception: not reasonable practicable
​
“(6) A person -
[...]
(c) for whom the Commissioners are satisfied that it is not reasonably practicable to make a return using an electronic system…for reasons of disability, age, remoteness of location or any other reason,
is not required to make a return required by Regulation 25 using an electronic return system.” (SI 1995/2518, r.25A(6)(c))
Unlawful discrimination against taxpayer
“I decided, relying on those rights, that for reasons explained in L H Bishop, the appellants in that case were discriminated against because the requirement to file online put them to an extra expense not suffered by persons who were not old/disabled/too remote. I also decided that that discrimination was outside the UK’s margin of appreciation on such matters and therefore unlawful because (a) the UK had given exemption to other classes of persons, such as those with religious objections and (b) the UK had itself recognised (by an unlawful telephone filing concession) that elderly/disabled/remote persons ought to have an exemption.” (Clements v. HMRC [2016] UKFTT 522 (TC), §19).
Not unlawful discrimination against taxpayer’s agent
“As I explained in Additional Aids, that reasoning is of no help to the appellants in these appeals. Firstly, there is no causation. In other words, Mr Clements has not suggested he would be put to extra expense if he was required to file online. On the contrary, it is clear that he pays Mr Bland to file his tax returns by paper. He could as easily instruct and pay a different agent to file his tax returns online…Firstly, the appellant lacks victim status so he cannot use his appeal to assert Mr Bland’s human rights. Secondly, to the extent that the requirement to file online indirectly discriminates against agents who are too old to be computer literate or too disabled to file online, this is clearly within the UK’s margin of appreciation because all agents are treated alike and, were the law to be otherwise, it would enable taxpayers to escape the obligation to file online by instructing agents who could not do so. For either reason, the appeal, relying on Mr Bland’s human rights, is bound to fail.” (Clements v. HMRC [2016] UKFTT 522 (TC), §§20…23).
Time of submission of electronic returns
"(12) Subject to paragraph (13) below and unless the contrary is proved—
(a) the use of an electronic return system or a compatible software return system shall be presumed to have resulted in the making of the return to the Controller only if this has been successfully recorded as such by the relevant electronic validation process,
(b) the time of making the return to the Controller using an electronic return system or a compatible software return system shall be presumed to be the time recorded as such by the relevant electronic validation process, and
(c) the person delivering the return to the Controller shall be presumed to be the person identified as such by any relevant feature of the electronic return system or a compatible software return system." (SI 1995/2518, r.25A(12))
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VAT return gives rise to debt
"[39] There are also important differences between payment traders and repayment traders which mean that they are not wholly comparable. When a payment trader makes a self-assessed VAT return to HMRC, that trader discloses in its return the sum which is prima facie due as tax to HMRC: Chamberlin v Revenue and Customs Commissioners [2011] EWCA Civ 271; [2011] STC 1237, para 26 per Sir Andrew Morritt C. A repayment trader’s claim for a VAT credit in its VAT return by contrast involves no recognition of the validity of the claim by the entity which may be liable to pay the claimed sum or a lesser sum. In Tradecorp Lightman J (para 17) stated: “a claim which has been admitted or upheld (and only such a claim) gives rise to a right of deduction and, if the deduction exceeds the amount of tax due, a prima facie right to immediate payment.” (DCM (Optical Holdings Ltd) v. HMRC [2022] UKSC 26, Lord Hodge)
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"[26]...First, in the context of the VAT Act 1994 and subordinate legislation the supplier of services in the United Kingdom is liable to VAT on the value of his supply. This liability is expressed in s.1(2) and 25(1) of the VAT Act 1994 and in paragraph 40(2) of the VAT Regulations. The liability is quantified by the return the taxable person is obliged to make. In particular boxes 1 and 5 constitute a form of self-assessment. It is true that other provisions of the Act and rules specify that in the cases to which they refer HMRC may make an assessment and in some cases that the amount of the resulting assessment is recoverable as a debt. But the converse cannot be correct. Take s.73 - that section permits an assessment in the case of incorrect or incomplete returns. It cannot seriously be suggested that in cases where a complete and correct return has been made there is no liability for the amount shown by the taxable person to be due. It is at the least an admission of a statutory liability for VAT. The returns submitted by the Applicant clearly established the liabilities on which the statutory demand and bankruptcy order were based, no separate point of relevance was taken in respect of the surcharges." (HMRC v. Chamberlin [2011] EWCA Civ 271)
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