1. Register your business for Making Tax Digital
Your business must be signed up to 'Making Tax Digital for VAT' with HMRC in order for your VAT to be managed by smart apps like ANNA.
It can take up to 72 hours for HMRC to process your registration, so it's best to get this done as early as possible.
Only when you have received a confirmation email from HMRC should you move on to Step 2, and connect your ANNA app to HMRC.
Already signed up to MTD? Great! You don't need to do it again.
2. Connect to HMRC
This will enable you to file your VAT via ANNA at the tap of a button.
Don’t forget to register for Making Tax Digital for VAT with HMRC first, or your account will be connected – but ANNA won't be able to file VAT for you. (See Step 1 for all the info).
There are two places in ANNA where you can connect to HMRC:
• At the bottom of your VAT Return
• From your Tax & VAT Settings in your Settings area
Tap the ‘Connect to HMRC’ button. You will need your Gov.UK Gateway ID and Password to log into your business online account and authorize the connection.
3. Log your VAT in ANNA
It’s easy to log your VAT in ANNA, so you can submit an accurate return. How things are calculated depends on which VAT scheme you're on. How it works:
Standard VAT Scheme
If you're on the standard scheme, you'll need to charge your customers VAT and send this to HMRC. However, any VAT you've spent on allowable expenses can be deducted first, decreasing what you need to pay.
In ANNA, check the right VAT amount is added to your bank transactions, and everything will be counted up for you. Do this for your expenses and sales.
Check the correct expense categories have been added to your transactions too (like Materials or Stationery, for example). Anything categorised as Personal Expense won't be factored into your tax calculations.
Want to save time? Just send us your receipts and invoices by chat or email them to email@example.com and ANNA's smart technology will log the VAT for you.
Flat Rate VAT Scheme
On the Flat Rate VAT Scheme you'll still need to charge your customers normal VAT but you only need to pay a special percentage rate of your sales to HMRC. The rate is linked to your industry type.
For example, the flat rate for Photographers is 11%. A photographer would charge their customers 20% VAT but only pay 11% of their sales amount to HMRC.
ANNA will log your VAT to pay on sales using your flat rate percentage. All you need to do is check the money you receive from sales is labelled with the category, sales.
On this scheme you can’t reclaim VAT on your purchases – except for certain capital assets over £2,000.
If you can claim VAT on a capital asset over £2,000, make sure VAT is added to the expense transaction in ANNA and it has the category 'Equipment' or 'Vehicle purchase'.
4. Check your VAT is logged in each box on your return
Your VAT Return is divided into 9 boxes, and every box must be complete before you can submit to HMRC. This should show a total of all your VAT amounts, sales and applicable expenses.
If any VAT is missing from your 9 boxes, revisit Step 3 and sure all your VAT is logged on your bank transactions in ANNA.
5. File your VAT Return
Once your business is registered for Making Tax Digital and you’re connected to HMRC, you can file your VAT Return from the ANNA app at the tap of a button.
When you’re happy with the amounts in each of the 9 boxes on your VAT Return, tap ‘Submit to HMRC’ at the bottom. You'll receive a confirmation email from ANNA that your return has been filed successfully.
6. Pay your VAT bill (or get a rebate)
After you've filed your VAT Return, you'll need to pay HMRC the amount you owe. Or if you’re owed VAT, you'll receive a rebate from HMRC.
Ways to pay HMRC
HMRC allows you to pay your VAT bill via bank transfer, direct debit or online using a bank card. See their help page on ways to pay.
Receiving a rebate
If you add your bank account details to your HMRC Online Services account at least 14 days before you file your return, you'll automatically receive your money from HMRC into your bank account. If you haven't done this, HMRC will post you a cheque.
Find out more about getting your money back on HMRC's reclaiming VAT page.