VAT Return Checklist Template (Making Tax Digital)

What the VAT Return Checklist Covers

1. 1
   Set-Up

   Phase 1: Confirm the Period & Scope

   6 tasks

   The scope questions decide which tasks and phases appear, so answer them before anyone starts on the records.

   • Confirm the period dates, filing deadline and payment date — from your software or HMRC online account; usually one calendar month and 7 days after the period ends
   • Choose the preparer and the reviewer — the reviewer must be someone other than the preparer
   • Check the MTD software is still connected to HMRC — re-authorise it now if the connection has lapsed, not on deadline day
   • Answer the special transaction questions — imports under postponed VAT accounting, reverse-charge supplies, and goods moved between Northern Ireland and the EU
   • Confirm whether the business is partly exempt — it makes exempt supplies, such as some property, finance or insurance income
   • Record any errors found on earlier returns — with the period, the amount and how they were found
2. 2
   Records

   Phase 2: Complete the Digital Records

   6 tasks

   • Post every sales invoice and credit note in the period of its tax point — check the sales ledger against the billing system and the invoice numbering sequence
   • Post every purchase invoice and check the VAT is reclaimable — a valid VAT invoice, a business purpose, and no blocked items such as business entertainment
   • Record card, cash and expense claim transactions — with a VAT receipt for every reclaim
   • Check every link between programs is digital — no retyped or pasted figures between spreadsheets, bridging software and the ledger
   • Reconcile the bank accounts to the period end — so no transaction is missing from the VAT records
   • Review the VAT codes on unusual transactions — zero-rated, exempt, outside the scope, and mixed supplies
3. 3
   Special Items

   Phase 3: Imports, Reverse Charges & Special Items

   5 tasks

   The first three tasks appear only when the matching Phase 1 question is answered Yes.

   • Download the postponed import VAT statement and agree it to your import records — include the VAT in boxes 1 and 4 and the import value in box 7; estimate if a statement is missing
   • Account for reverse-charge purchases — construction services and services from overseas suppliers; output VAT in box 1 and input VAT in box 4
   • Report goods moved between Northern Ireland and the EU — boxes 2, 8 and 9, and an EC Sales List for sales to EU VAT-registered customers
   • Review customer debts for bad debt relief — unpaid for at least six months after the later of the due date and the supply, and written off
   • Repay input tax on supplier invoices unpaid after six months — as a reduction in box 4
4. 4
   Reconcile

   Phase 4: Reconcile & Prepare the Return

   5 tasks

   • Reconcile the VAT control account to the draft return — explain any difference before going further
   • Agree boxes 6 and 7 to the sales and purchase ledgers — net values, excluding VAT
   • Compare the return with the last period and the same period last year — and explain every significant movement
   • Check the largest input tax claims individually — capital purchases, property costs and anything outside the normal run of costs
   • Attach the draft return and supporting reports — the VAT report, the reconciliation and the working papers
5. 5
   If Partly Exempt

   Phase 5: Partial Exemption

   4 tasks

   Shown only for businesses that make exempt supplies as well as taxable ones.

   • Attribute input tax to taxable supplies, exempt supplies or both — the residual share is the part used for both
   • Calculate recoverable residual input tax — using the standard method or your HMRC-approved special method
   • Run the de minimis test — exempt input tax no more than £625 a month on average and no more than half of all input tax
   • Diarise the annual adjustment — due in the first return after the partial exemption year ends, or brought forward to the last return of that year
6. 6
   If Needed

   Phase 6: Correct Errors on Earlier Returns

   5 tasks

   Shown only when errors on earlier returns were recorded in Phase 1.

   • Work out the net value of the errors — across all the earlier periods affected, and note whether any were deliberate
   • Check the error correction threshold — £10,000, or 1% of box 6 up to £50,000
   • Correct errors within the threshold on this return — record the adjustment in the VAT account with a note of the periods affected
   • Report larger or deliberate errors to HMRC separately — online or in writing; they cannot go on this return
   • Confirm each error is within the four-year time limit — counted from the end of the period in which it was made
7. 7
   Submit & Pay

   Phase 7: Review, Submit & Pay

   6 tasks

   • Review and approve the return — the reviewer checks the reconciliation and working papers, then answers Approved or Not approved
   • Submit the return through MTD-compatible software — before the deadline, and attach the submission receipt
   • Pay the VAT due, or confirm the Direct Debit — the money must reach HMRC by the deadline; Direct Debits are collected 3 working days after it
   • Post the VAT payment and clear the control account — the balance after payment should be nil or explained
   • Check the HMRC account for penalty points, interest or letters — and assign an owner to anything that needs a response
   • Archive the VAT file for the period — VAT records must be kept for at least 6 years