The VAT Online filing service has a number of useful features that you need to be aware of.

Since April 2010 most VAT-registered businesses have been required to submit their VAT Returns online and pay any VAT due electronically. From 1 April, 2012 HM Revenue & Customs (HMRC) plans to extend this requirement to all VAT-registered businesses, apart from a very small number who will be exempt.

From 1 April, 2010 the payment of VAT Returns online was due electronically if either of the following applied:

• you registered for VAT before 1 April, 2010 and had an annual VAT-exclusive turnover of £100,000 or more for the 12 months ended 31 December, 2009;
• you registered for VAT on or after 1 April, 2010 (regardless of turnover).

In the case of the first group, you must continue to submit all your VAT Returns online (including nil and repayment returns) even if your turnover drops below £100,000 in the future.

From 1 April, 2012 all remaining VAT-registered businesses - those registered for VAT before 1 Apri,l 2010 with a VAT-exclusive turnover of less than £100,000 - will also have to submit VAT Returns online and pay any VAT due electronically.

If you are still submitting VAT Returns on paper, HMRC strongly recommends you sign up to using the online service before April 2012 so that you have time to get familiar with the new service. Using the online service is quick and easy, and in most cases gives you extra time to submit your return and pay any VAT due.

The VAT Online filing service has a number of useful features that you need to be aware of to get the best from the service:

• Security - all transactions are 100% secure as they're encrypted to the highest commercial standards. You get a unique User ID and create a password to keep your details safe. This allows only you - or someone you authorise - to have access to that information;
• Speed - going through the online registration and enrolment process (which you need to do once only) takes just a few minutes. You'll be able to submit your return as soon as you've signed up to VAT Online services - you don't have to wait for an Activation Code to arrive in the post;
• Convenience - the online service is available day and night, whenever is best for you;
• Accuracy - there are automatic checks to help reduce errors, meaning there's less chance of having your return sent back to you to be corrected or for clarification. In particular, the service automatically calculates and enters certain values;

The first step to submitting your VAT Return online is to sign up for VAT online services. You need to do this whether you choose to use commercial software or HMRC's free online service. Alternatively, you can use an accountant or agent to submit your returns online, in which case your agent will need to sign up for VAT online services on your behalf.

When you submit your VAT Returns online, you must also pay any VAT due electronically. Paying electronically will normally give you to up to seven extra calendar days to submit your return and pay your VAT, unless you make annual returns or payments on account. The extended due date will be shown on your online return and you must ensure that cleared funds reach HMRC's bank account by this date. If your payment clears later than this, you may be liable to a surcharge for late payment.

There are various ways to pay including by Direct Debit, online and telephone banking. You can also pay by cheque at a bank or building society using a Bank Giro paying-in slip which can be obtained from HMRC. Since some of these methods can take a little time to set up, you should choose which method you want to use and set it up well in advance of the filing and payment deadline.

You may not have to submit your VAT Return online or pay your VAT electronically if either of the following applies:

• you're subject to an insolvency procedure - but if you're subject to an approved Voluntary Arrangement, administration or trust deed you may submit online if you want to;
• HMRC is satisfied that your business is run by practising members of a religious society, whose beliefs prevent them from using computers.

If you were VAT registered before 1 April, 2010 and are first required to submit online returns from 1 April, 2012 you will be charged a penalty if you submit a paper return for accounting periods ending on or after 31 March, 2013.    HMRC may also charge separate penalties if you pay late or make an error on your return.

The amount of each penalty will depend on your annual turnover (excluding VAT) based on the 12 months figures up to and including those on the paper return which triggers the penalty.

More information can be found at: www.hmrc.gov.uk.