Posted January 22, 2026

VAT Quarter Ends: Preparing Your January Return

As we head towards the end of January, any business with a December VAT quarter will need to prepare and submit their VAT return by 7th February. With the festive period behind us and business ramping up again, now is the time to get your VAT affairs in order.

Key Dates to Remember

Quarter end: 31st December 2025
Submission deadline: 7th February 2026
Payment deadline: 7th February 2026

Missing these deadlines triggers HMRC’s points-based penalty system for late filing and immediate interest charges on late payments. Don’t let the post-Christmas lull catch you out.

Your Quick Preparation Checklist

Gather Your Records Now

With only a couple of weeks before the deadline, make sure you have collected together everything from 1st October to 31st December:

All sales invoices (including card payments and cash sales)
Purchase invoices from suppliers
Credit notes issued and received
Bank and credit card statements
Import/export documentation if applicable

Top tip: If you’re missing any supplier invoices, chase them now. You can’t reclaim VAT without a valid VAT invoice showing the supplier’s VAT number, description of goods/services, and the VAT charged.

Check Your MTD Compliance

Making Tax Digital for VAT is mandatory. Ensure you’re using MTD-compatible software and maintaining digital links between your records and VAT return. If you’re still manually entering figures from spreadsheets, you may not be compliant.

Understanding What You Can Claim

Where you have been charged VAT by your suppliers, you can reclaim VAT on:

Stock and materials
Equipment and machinery
Office supplies
Business vehicle costs (not private mileage)
Professional fees
Utilities for business premises

You cannot reclaim VAT on:

Personal expenses
Client entertainment
Purchases without valid VAT invoices

Watch out for mixed use: If you use something for both business and personal purposes (like a mobile phone), only claim the business proportion.

The Nine Boxes Simplified

Box 1: VAT charged on your sales
Box 4: VAT you’re reclaiming on purchases
Box 5: Net amount-what you owe HMRC or they owe you
Box 6: Total sales excluding VAT
Box 7: Total purchases excluding VAT

Common Pitfalls to Avoid for the December VAT Quarter

The Christmas closure trap: Many businesses operate differently over Christmas. Ensure all December transactions are captured, including those final days of trading.

Deposit confusion: If you took deposits in December for work to be completed in January, you must account for VAT on those deposits in this return, not the next one.

Year-end purchases: That equipment you bought in late December to use your remaining budget? Don’t forget to claim the VAT on it.

Credit card timing: Check your credit card statements carefully. Transactions made in late December might not appear on statements until January, but they still belong in this quarter if the invoice is dated in December.

Three Quick Wins for This Quarter

Reconcile as You Go

Don’t leave reconciliation until you’re preparing the return. If you use accounting software, reconcile your bank transactions weekly throughout January. This catches errors early and makes final preparation much quicker.

Set Aside Your VAT Payment

If you typically owe VAT, transfer the expected amount to a separate account now. This ensures funds are available when the payment deadline arrives and protects your cash flow.

When to Seek Professional Help

While many businesses handle VAT themselves, certain situations warrant professional advice:

Your figures show unusual variations from previous quarters
You’ve made significant capital purchases or started exporting
You make both taxable and exempt supplies
You’ve received correspondence from HMRC

Getting VAT wrong can be costly. Errors lead to interest charges, penalties, and potential HMRC inspections.

Make This Your Smoothest VAT Return Yet

The January VAT return doesn’t need to be stressful. With early preparation, organised records, and systematic checking, you can submit confidently and on time. Treat it as a fresh start for the new year, good VAT habits established now will make every future return easier.

The key is starting this week, not waiting until early February when time pressure builds. An hour spent organizing records now saves several hours of panic later.

Need Support with Your VAT Return?

Whether you need help preparing your return, want a professional review of your figures, or would simply prefer to hand the whole process over to experts, we’re here to help. Our team ensures accurate, timely submissions so you can focus on running your business.

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