How do I submit VAT returns through Xero or QuickBooks?

Submitting VAT returns through software like Xero or QuickBooks is now the normal way of doing things in the UK. Since Making Tax Digital came in, most businesses can no longer type figures directly into HMRC’s website. Instead, VAT returns must be prepared and submitted through compatible software, using digital records.

On paper, this sounds simple. In practice, I see many businesses struggle, not because the software is bad, but because they do not fully understand the process, the checks that should be done beforehand, or what the software is actually submitting to HMRC.

In this guide, I am going to walk you through how to submit a VAT return using Xero or QuickBooks, step by step, in plain UK English. I will explain what needs to be done before you even open the VAT screen, how the submission process works in each system, and the common mistakes I see that cause VAT problems later.

By the end, you should feel confident submitting a VAT return yourself, or at the very least, confident enough to understand what your software or accountant is doing on your behalf.

Before you submit anything, understand this one point

This is the most important thing I say to clients.

Xero and QuickBooks do not calculate VAT intelligently on their own. They simply report whatever data you have entered.

If your transactions are wrong, coded incorrectly, incomplete, or unreconciled, the VAT return will also be wrong, even if the submission process itself goes through perfectly.

Submitting a VAT return is the final step, not the first.

What Making Tax Digital actually requires

Making Tax Digital for VAT requires three main things:

• Digital records of sales and purchases

• Digital links between records and the VAT return

• Digital submission of the VAT return to HMRC

Both Xero and QuickBooks are fully MTD compliant, which means they can connect directly to HMRC and submit VAT returns without manual re entry.

However, compliance does not equal correctness. That part is still down to you.

What you need before submitting a VAT return

Before you even open the VAT return screen in Xero or QuickBooks, I always recommend checking the following.

Your VAT period and deadline

Confirm:

• The VAT period you are submitting

• The submission deadline

• Whether the return is quarterly, monthly, or annual

Do not assume. Check.

All transactions are entered

Make sure:

• All sales invoices are entered

• All purchase invoices and expenses are entered

• No transactions are missing

• No duplicates exist

Missing just one invoice can change your VAT position significantly.

Bank accounts are reconciled

This is non negotiable.

If your bank is not reconciled:

• You may be missing income

• You may be missing expenses

• VAT figures may be incomplete

Unreconciled VAT returns are one of the biggest red flags I see.

VAT codes are correct

Every transaction should have a VAT code, and the correct one.

Common issues include:

• Standard rated items coded as zero rated

• Expenses coded as VAT reclaimable when they are not

• Outside scope items included incorrectly

Software will not fix this for you.

Submitting a VAT return in Xero

Let us start with Xero.

The process itself is straightforward, but only if the data behind it is clean.

Step one, check your VAT return in Xero

In Xero, go to:

• Accounting

• Reports

• VAT Return

Select the VAT period you want to review.

Xero will automatically calculate the figures for each VAT box based on your transactions.

At this stage, do not submit anything.

Review first.

Step two, review each VAT box carefully

You should look at:

• Box 1, VAT on sales

• Box 4, VAT on purchases

• Box 5, VAT payable or reclaimable

• Box 6, total sales excluding VAT

• Box 7, total purchases excluding VAT

Ask yourself:

• Do these figures broadly make sense

• Are they in line with previous periods

• Is there any unexpected spike or drop

If something looks odd, stop and investigate before submitting.

Step three, drill down into the details

One of Xero’s strengths is the ability to drill down.

You can click into each box and see:

• The transactions included

• The VAT codes used

• The dates applied

This is where most errors are found.

I often find:

• Old invoices included by mistake

• VAT coded to the wrong rate

• Personal expenses included

Fix the data first, not the return.

Step four, lock the VAT period

Once you are happy the VAT return is correct, Xero will lock the VAT period after submission.

This is important because:

• It prevents accidental changes

• It protects the integrity of the submitted figures

If you need to make changes later, they must go into the next VAT period or be adjusted properly.

Step five, submit the VAT return to HMRC

To submit:

• Click Submit VAT Return

• Authorise the connection to HMRC if required

• Confirm submission

Xero will send the return directly to HMRC.

You should then receive:

• An on screen confirmation

• A submission receipt reference

Always save or download this confirmation.

Step six, pay the VAT

Submitting the VAT return does not pay the VAT.

You still need to:

• Pay HMRC manually, or

• Ensure Direct Debit is in place

Many VAT penalties happen simply because payment was forgotten.

Submitting a VAT return in QuickBooks

QuickBooks follows a very similar process, but the layout is slightly different.

Step one, open the VAT centre in QuickBooks

In QuickBooks, go to:

• Taxes

• VAT

Select the VAT period you want to review.

QuickBooks will show a VAT summary for that period.

Again, this is a review stage, not submission.

Step two, review the VAT summary

Check:

• VAT due

• VAT reclaimed

• Net VAT payable or refundable

As with Xero, ask whether the figures make sense compared to previous quarters.

Unexpected changes usually indicate data issues.

Step three, review VAT detail reports

QuickBooks allows you to view:

• VAT detail by transaction

• VAT by rate

• VAT exceptions

This is where I recommend spending time.

Common issues include:

• Incorrect VAT on mileage

• VAT reclaimed on entertainment

• Sales coded to the wrong rate

Fixing these before submission saves headaches later.

Step four, submit the VAT return

When you are satisfied:

• Click Submit to HMRC

• Authorise the HMRC connection if required

• Confirm submission

QuickBooks will submit the return digitally under Making Tax Digital rules.

As with Xero, you should receive confirmation of submission.

Save it.

Step five, record and pay the VAT

QuickBooks will post the VAT liability automatically.

You still need to:

• Pay HMRC by the deadline

• Reconcile the VAT payment when it leaves the bank

Failure to reconcile VAT payments is another common issue I see.

Common mistakes when submitting VAT returns in software

Over the years, I have seen the same problems repeatedly.

Submitting without reconciliation

This often leads to:

• Missing income

• Underpaid VAT

• HMRC queries later

Always reconcile first.

Trusting the software blindly

The software does not know:

• Whether something is business related

• Whether VAT is reclaimable

• Whether an invoice is correct

It only follows the codes you give it.

Editing past VAT periods

Once a VAT return is submitted, do not change transactions in that period unless you know exactly what you are doing.

Changes after submission can:

• Break audit trails

• Cause future VAT errors

• Create reconciliation issues

Forgetting to pay the VAT

This sounds obvious, but it happens a lot.

Submission and payment are separate actions.

What if you find an error after submission?

This is very common.

If the error is small, it can usually be corrected on the next VAT return.

If the error is large, HMRC may require a separate disclosure.

Do not panic, but do not ignore it either.

Software does not remove the need to deal with mistakes properly.

How VAT schemes affect submission in Xero and QuickBooks

The submission process looks the same regardless of scheme, but the calculations behind it differ.

For example:

• Flat Rate Scheme VAT looks higher in Box 1

• Cash Accounting Scheme changes timing

• Annual Accounting Scheme changes frequency

Make sure the correct VAT scheme is set up in the software before submitting anything.

Why first VAT returns deserve extra care

HMRC often looks closely at first VAT returns.

This is because:

• Errors are common

• Large reclaims are more likely

• Setup issues often appear

I always recommend extra checks on the first return, especially where pre registration VAT is included.

How I advise clients to manage VAT submissions

In practice, the smoothest VAT submissions follow a simple pattern.

I usually advise:

• Monthly bookkeeping, even if VAT is quarterly

• Bank reconciliation at least monthly

• VAT report review well before the deadline

• Submission several days early

VAT problems are almost always timing problems.

Should you submit VAT returns yourself or use an accountant?

There is no single right answer.

Many business owners successfully submit VAT returns themselves using Xero or QuickBooks.

However, an accountant adds value by:

• Reviewing VAT codes

• Spotting errors early

• Advising on schemes and reclaims

• Reducing HMRC risk

If your VAT position is complex, professional review is often worth far more than the fee.

Final thoughts

Submitting VAT returns through Xero or QuickBooks is not difficult from a technical point of view. The buttons are easy to find, and the connection to HMRC usually works smoothly. The real work happens before you ever click submit.

If your records are accurate, reconciled, and coded correctly, VAT submission becomes routine. If they are not, the software will still submit the return, but the problems will surface later, often with interest and penalties attached.

In my experience, businesses that treat VAT as an ongoing process rather than a quarterly panic rarely have issues. Xero and QuickBooks are powerful tools, but they work best when paired with understanding, discipline, and regular review.

If VAT submissions feel stressful or unpredictable, it is usually not the software that is the problem. It is the process behind it.