Checking, editing and locking a VAT return

How to check, edit and lock each quarter's VAT return on FreeAgent. FreeAgent always calculates your VAT in real time from the invoices, bills, payments and expenses you enter.

Where do I find the VAT returns?

To start, from the Taxes menu, choose VAT.

taxes menu - choose VAT

I can't see VAT on the Taxes menu.

If you haven't set your business as Registered for VAT, you won't see this option on the menu and you'll need to change the settings.

OK, I've selected VAT.

This brings up the VAT statement of account.

You can see here how much VAT has been due for each historic VAT return and how much you've paid. Bank payments that you explain as payments of VAT or VAT refunds will show on this screen, so that you can work out whether you owe anything to HMRC or whether they should be paying you.

VAT screen - VAT statement of account

I want to look at an individual return.

To navigate to each VAT return, use the drop-down menu here. You can choose from the VAT return for the quarter you're in at the moment, plus all the historic VAT returns.

looking for an individual VAT return in FreeAgent

Or you can select on a VAT return on this list to go to it.

VAT return section - select on VAT return

This then brings up the VAT screen.

VAT return preview for period 2012-13

FreeAgent will warn you if there is a gap between the last set of data you entered and the end of the quarter. It will also warn you here if you have unexplained bank transactions on a business account, because you won't be able to file your VAT return until you have explained all the transactions on all your business bank accounts.

VAT return - warning box for unexplained bank transactions on a business account

I need to change the settings for this return.

The Details box shows you how this VAT return is being worked out. To change any of this information, select the Edit Details button.

VAT return - select the edit details button

You can then change various settings.

For example, you can change the date the VAT period ends on. This will then roll forward and create the next return three months after the new date.

And you can change whether your business is cash accounting for VAT or invoice accounting for VAT on this return. If you change the settings on a return, please be sure to apply the same changes to any future-dated returns that FreeAgent has already generated. When the settings have been changed on all these returns, FreeAgent will default to the new setting when it creates VAT returns in the future, so you shouldn't need to change the basis again

VAT return details - selecting whether your business is cash accounting or invoice accounting for VAT

You can also change whether or not it is using the VAT flat rate scheme, and what sector it is in for that. Again this will usually be a permanent change so don't forget to check it has changed on future VAT returns too.

VAT return - choose whether or not your business is using the flat rate scheme or not and what sector it is in

And you can add the fuel scale charge if it applies. This will be if you've claimed input VAT on both your private and business motor expenses. Choose the CO2 band for your car. You can usually find this on the V5 registration form.

fuel scale charge - CO2 band charge drop-down menu

OK, my VAT return is finished.

Once you're confident that you've correctly entered all your transactions into FreeAgent for the VAT return, you can either file it online through FreeAgent, or, if you're using a different way to file your returns with HMRC, mark your FreeAgent VAT return as filed by selecting the Unfiled button and choosing Mark as filed.

VAT return - select unfiled button and choose mark as filed

I can't see the "Mark as filed" option.

That could mean:

  • You haven't finished explaining your bank transactions for the VAT quarter, or
  • Your accountant has restricted your access to your account. You'll need to speak to your accountant about this.
  • What happens when I mark my VAT return as filed?

    When a VAT return period has been marked as filed, you won't be able to change any transactions dated during that period, or to enter any new transactions dated during that period. So do make sure you've entered everything before marking the return as filed.

    It's important that you do mark your VAT returns as filed as you go along, so that you have an accurate record of your returns to show to your accountant and/or a visiting HMRC & Customs inspector.

    Marking a VAT return as filed also automatically marks as filed any older, unfiled returns.

    Can I set a return back to "Not Filed"?

    If you select the Filed button (which replaces Unfiled once the return is filed), FreeAgent will do this for you, but it will also mark as unfiled any future filed returns. So if you've marked both your March and June VAT returns as filed, then you mark March's as unfiled again, FreeAgent will also mark June's as unfiled.

    HMRC expect that, if you make a mistake on a VAT return, you'll correct it on a future return, not by changing an old return. So it's not usually a good idea to start marking historic VAT returns as unfiled. It's safe to mark the latest return as unfiled if you discover before you've filled in your green form that you've left transactions off, but otherwise, correct VAT returns in the future, not the past.

    You can also make corrections to a historic VAT return without marking it as unfiled.

    Once you've marked your VAT return as filed, you can write the figures here on to your green form, or type them into the HMRC online filing website.

    vat return preview - boxes 1-9

    Or you can file your VAT return online directly through FreeAgent.

    How do I know what invoices, bills etc are on this VAT return?

    Near the top of the screen you'll find a tab labelled Full Report.

    VAT return - show full report

    Select this to see the transactions that make up this VAT return. So if you get a VAT inspection you can show this screen to the inspector.

    VAT return full report - vat breakdown

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