At the end of each prescribed accounting period, every registered person must make a return to HMRC on the VAT 100 form provided, showing the amount of VAT payable (VATA 1994, Sch. 11, para. 2(1)). The return must usually be made not later than the last day of the month next following the end of the period to which the return relates and any VAT due for that period must accompany it. A prescribed accounting period is normally a period of three months.
Under VATA 1994, s. 25(1), it is possible for a taxable person to account for and pay VAT in accounting periods of other than three months.
Monthly returns have the effect of disclosing a VAT-registered person’s VAT liability to HMRC sooner than any other form of return submission. The use of monthly returns is therefore recommended only to those persons who are in a repayment situation (their input tax exceeds the output tax collected) e.g. exporters, food producers (whose supplies are taxed at the zero rate).
In certain cases, perhaps where the trader has been late in sending in his returns or where he has been connected with some business which has been in default with its VAT liabilities, HRC may insist that a trader actually submits monthly returns (Value Added Tax Regulations 1995 (SI 1995/2518), reg. 25(1)(c)).