VAT returns in Business Central follow a structured process: review VAT entries, run the settlement batch job to close the period, create the VAT return, and submit it to your tax authority. The exact steps depend on your country localization, but the core workflow is consistent across most setups.
This guide covers the full process for a standard VAT return period, including the UK Making Tax Digital (MTD) submission path. Users on other localizations will follow the same structure but submit manually or via a separate integration.
Step 1: Review the VAT Statement
Before settling VAT, verify that your VAT Statement is configured correctly. The statement defines which VAT entries roll into each box on your return.
- Search for VAT Statements using
Alt + Q. - Open the statement that applies to your VAT period (typically named after your country or VAT scheme).
- Review each line: confirm that Type, Gen. Posting Type, VAT Bus. Posting Group, and VAT Prod. Posting Group filters are correct.
- To preview the figures, select Preview from the action bar and enter your date range.
If any lines pull unexpected amounts, investigate the underlying VAT Entries before proceeding.
Step 2: Review VAT Entries
- Search for VAT Entries using
Alt + Q. - Filter by Posting Date to cover the VAT period you are settling.
- Check for entries with incorrect VAT Bus. Posting Group or VAT Prod. Posting Group assignments.
- If you find errors, trace them back to the originating document and correct the posting group setup before settling.
Unreversed correction entries or manual journal lines posted directly to VAT accounts will also appear here. Confirm these are intentional before moving to settlement.
Step 3: Run the Calc. and Post VAT Settlement Batch Job
The Calc. and Post VAT Settlement batch job closes open VAT entries for the period and posts the net VAT liability or receivable to your VAT settlement G/L account.
- Search for Calc. and Post VAT Settlement using
Alt + Q. - Set the Starting Date and Ending Date to match your VAT period.
- In the Posting Date field, enter the date on which the settlement journal line should post.
- Set the Document No. (used for the generated G/L entry).
- In the Settlement Account field, enter the G/L account that receives the net VAT balance (typically your VAT payable or VAT receivable account).
- Check Post to commit the entries. Leave it unchecked for a test run.
- Select OK to run the batch.
After the job completes, the settled VAT entries will be marked as Closed in the VAT Entries list. A G/L entry is created on your settlement account for the net amount.
If you need to reverse the settlement (for example, after finding an error), locate the posted document number in G/L Entries and use Reverse Transaction.
Step 4: Create a VAT Return
- Search for VAT Returns using
Alt + Q. - Select New to create a return for the period.
- Fill in the VAT Return Period, this links the return to the correct obligation.
- Select Suggest Lines to populate the return boxes from the VAT Statement. Confirm the date range when prompted.
- Review each box value. Spot-check against your VAT Statement preview from Step 1.
If figures differ from your expectations, go back to VAT Entries and check for entries posted outside the selected date range or assigned to an unexpected posting group.
Step 5: Submit the VAT Return
UK – Making Tax Digital (MTD) Submission
For UK companies, Business Central includes a native MTD integration.
- On the VAT Return card, select Submit from the action bar.
- If this is your first submission, you will be prompted to authenticate with HMRC via OAuth. Follow the on-screen steps.
- Confirm the submission details and select Submit.
- Business Central sends the return to HMRC and updates the Status field to Submitted.
HMRC will confirm receipt. You can check the status of the obligation in the VAT Return Periods page.
Other Localizations – Manual Submission
If you are not using MTD or a country-specific integration:
- Use your VAT Statement preview or the VAT Return box values to populate the return form for your tax authority.
- Submit through your tax authority’s portal or paper process.
- Update the Status on the VAT Return card to reflect that it has been filed.
Some localizations (Germany, Netherlands, Spain, and others) include their own electronic filing integrations. Refer to the localization documentation for those workflows.
Step 6: Reconcile VAT
After submission, confirm that your VAT settlement account balance matches what was submitted.
- Search for Chart of Accounts using
Alt + Q. - Locate your VAT settlement account and select G/L Account Balance to view the period balance.
- Compare this figure against the net VAT on your submitted return.
- If the figures match, record the payment or receipt in Business Central when you pay the tax authority or receive a refund.
To record the VAT payment:
- Search for Payment Journals using
Alt + Q. - Post a payment line to your bank account and the VAT settlement G/L account for the amount paid.
VAT Statement Setup Reference
If your VAT Statement needs adjustment, each line uses the following key fields:
| Field | Purpose |
|---|---|
| Row No. | Box number on the VAT return |
| Type | Account Totaling, VAT Entry Totaling, or Row Totaling |
| Gen. Posting Type | Sale or Purchase |
| VAT Bus. Posting Group | Filters entries by business posting group |
| VAT Prod. Posting Group | Filters entries by product posting group |
| Amount Type | Base, Amount, or Unrealized |
| Calculate with | Sign to add or subtract from the total |
Changes to the VAT Statement take effect immediately on the next preview or suggestion run, they do not retroactively affect already-settled entries.
To control which users can run the VAT settlement batch job or submit returns, see How to Configure Security Groups in Business Central.