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HMRC internal manual

VAT Accounting Manual

Accounting for VAT: summary of legal provisions

The table below summarises the main legal provisions governing VAT returns and payments.

Legal provision Rule
Council Directive 2006/112/EC (Articles 250, 251 and 252) - EU provisions for VAT returns Art. 250: Requires VAT returns setting out all necessary information.

Art. 251: Provides for electronic VAT returns and enables them to be required.

Art. 252: Member States determine the length of a return period (cannot be more than one year) and its deadline (cannot be more than two months after the end of the period).    
  VAT Act 1994, Section 25(1) VAT must be accounted for and paid in such time and manner as determined by or under regulations.
  VAT Act 1994, Schedule 11, paragraph (2)(1) This is an enabling provision. The rules for returns are specified in VAT regulations and Commissioners directions made under the regulations.
  Regulation 25A(3) A VAT return must be submitted electronically, subject to limited exceptions.
  Regulation 25A(6) A business is exempt from submitting online if it is subject to an insolvency procedure; if HMRC are satisfied that it is run by a practising member of a religious society whose beliefs prevent them from using computers; or if it is not reasonably practicable for it to do so for reasons of age, disability or remoteness of location.
  Regulation 25(1) and 25(1)(c), VAT Regulations 1995 Standard VAT period is three months. The standard due date is the last day of the month next following the end of the period. HMRC may allow or direct use of monthly returns. HMRC may allow or direct periods of different length to a quarter.
  Regulation 25A(20), VAT Regulations 1995 Extra time is allowed for returns where payment is made electronically (includes electronic return where no payment is due).
The additional time is only as the Commissioners may allow in a specific or general direction (and such a direction can allow different times for different means of electronic payment).    
  Regulation 40 (2), VAT Regulations 1995 VAT must be paid no later than the due date of the return.
  Regulation 40 (2A), VAT Regulations 1995 Online returns must be paid electronically.
  Regulation 40(2B) , VAT Regulations 1995 40(2B) provides that, cheque payments will be treated as made on the day when the cheque clears to HMRC’s account and that this shall be the day when payment of any VAT shown as due is treated to be received for the purposes of section 59 of the VAT Act 1994.
  Regulation 40(4), VAT Regulations 1995 Extra time may be available for payment - but only where the payment is made electronically. Rules for any additional time are Commissioners direction made under regulation 40(3).
  Commissioners directions under regulations 25A (20) and regulation (40) (3) and (4) VAT Regulations 1995 (as amended) (see above) These directions set out the detailed legal rules for getting the extra time on HMRC’s website. Online filers access these as part of the process of registering and enrolling online. They are available by linking from a ‘terms and conditions’ page on our website which contains a tick box asking the trader to confirm that they have read them (i.e. the general terms and conditions which contain the aforementioned link).
See VATAC1300 for further details.