Xero makes filing your VAT returns simple. It's an electronic process, so there's minimal likelihood of human error!
Xero takes the transactions you've reconciled and automatically calculates the VAT component in the VAT return. HMRC only receives the information in the VAT return, not the underling transaction.
Below are the relevant steps for filing your return, taken from Xero's website, which probably contains more information than you need.
- In the Accounting menu, select Reports.
- Under Tax, click UK VAT Return.
- Create, save, and finalise your VAT return within Xero - help on doing this is here.
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When you've completed and reviewed the VAT return and you're ready to file it, under the Save menu select Save Final.
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Click File Now with HMRC.
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Xero will take you to the government gateway login portal. Enter your username and password. When HMRC accepts your login, Xero uploads your VAT return data.
If you have VAT to pay, pay it from your business bank account. When reconciling, please record the transaction to the code VAT, not as other income.