Preparing and filing a VAT return

Updated 7 September 2026·5 min read

Your VAT return is built from the books you already keep, so there is nothing to assemble at the end of a quarter. The work is checking it rather than making it.

Direct filing to HMRC is in development

Everything below works today: the figures, the nine boxes and the checks. Submitting the return to HMRC from inside Financial IQ is still being built, and we will appear on HMRC's list of recognised software before it goes live. Until then you file the figures through your existing route.

Before you open the return

Reconcile the period first. Anything still sitting unmatched is money the return does not know about, and it is much easier to sort now than to correct later.

Check the nine boxes

Every box is worked out from your transactions, and every one can be opened to see exactly which entries produced the figure.

VAT return · 1 Jun to 31 Aug 2026

Box 1 · VAT due on sales

£9,420.00

Box 2 · VAT due on acquisitions

£0.00

Box 3 · Total VAT due

Box 1 plus Box 2

£9,420.00

Box 4 · VAT reclaimed on purchases

£2,180.44

Box 5 · Net VAT to pay HMRC

Box 3 less Box 4

£7,239.56

Box 6 · Total sales excluding VAT

£47,100.00

Box 7 · Total purchases excluding VAT

£10,902.20

Boxes 3 and 5 are worked out from the others, so they are never something you type. If one of them looks wrong, the answer is in the boxes above it.

If you are on a scheme

Flat rate

The boxes are calculated to your flat rate percentage rather than the standard method, and the explanations change with it.

Cash accounting

VAT follows the money rather than the invoice date, so an unpaid invoice does not put VAT on this return.

Correcting a mistake

If you find an error in a return that has already gone, do not quietly edit the old period. Errors are corrected on your next return when they are small enough, and reported separately to HMRC on form VAT652 when they are not. Financial IQ keeps them as their own record either way, so the trail stays intact.

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