Setting up VAT is one of the first things you'll do for any VAT-registered business in Joy Pilot. Once your VAT registration details are in place, every invoice, expense, and asset you record is automatically tagged with the correct VAT treatment, your connection to HMRC for Making Tax Digital (MTD) can be switched on, and you can prepare and file your VAT returns directly from one screen.
This guide walks through the whole journey, in order: the VAT page at a glance, adding your VAT settings, connecting to HMRC for MTD, and creating and submitting a VAT return.
📌 Before you start: You'll need your business's VAT registration details from HMRC (VAT number, registration date, scheme, and filing frequency) and a Government Gateway account to authorise the MTD connection.
The VAT Page at a Glance
Everything to do with VAT lives on a single page, reached from the left-hand menu under VAT returns. Before diving into each step, it helps to see how the page fits together.
The main VAT page brings everything together: your settings, your HMRC connection, the return builder, and your filing history.
There are five areas to know:
VAT Return (top) — where you name and create a new VAT return.
VAT Settings (left) — your VAT registration details. This is where you start.
VAT Account (right) — your HMRC connection: Direct Debit, MTD enrolment, and online filing authorisation.
Historical VAT Settings — a record of any past VAT settings that have since been superseded.
Previous VAT Returns (bottom) — every return you've already created or filed.
Step 1: Add Your VAT Settings
When a business is brand new in Joy Pilot, the VAT Settings panel shows Status: No records found, with a + Create button to add them.
A new business starts with no VAT settings. Click + Create to add them.
Click + Create to open the VAT settings form, then fill in your registration details. Here's what each field means:
Name — The name of the tax (VAT in the UK). This is fixed and shown for reference.
Status — The headline state of the registration. Choose Registered for a VAT-registered business. The other options (Not registered, Pending, Closed) are used when the business isn't yet, or is no longer, registered. Almost every other field below becomes required once you choose Registered.
VAT Registration Number — Your HMRC VAT number (the number that appears on your invoices and returns).
Basis — Whether you account for VAT on a Cash or Accrual basis. This is important — see Cash Basis vs Accrual Basis below.
Registration Date — The date you actually became VAT-registered with HMRC.
Effective from — The date these settings start to apply inside Joy Pilot. For your first registration, this is usually the same as your registration date.
Effective to — Leave this blank while the registration is current and ongoing. You only set an end date when you're closing off a period of VAT settings (for example, if your registration is changing or ending).
Scheme — Standard or Flat Rate. Most businesses are on Standard; only choose Flat Rate if HMRC has put you on the VAT Flat Rate Scheme. Choosing Flat Rate reveals four extra fields — your flat-rate business sector, the flat-rate start date, the flat-rate letter date, and a Ltd Cost Trader at 16.5% option (which is ticked by default, so untick it if it doesn't apply to you).
VAT filing frequency — How often you file: Monthly, Every 2 months, Every 3 months, Every 6 months, or Every 12 months. Standard UK quarterly returns are Every 3 months.
Month end for the first VAT filing — The date your first VAT return period ends. Joy Pilot uses this, together with your filing frequency, to work out the start and end dates of every VAT return period that follows. For example, with a quarterly frequency and a first period ending 31 March, your periods run Jan–Mar, Apr–Jun, Jul–Sep, and so on.
Once you save, your details appear in the VAT Settings panel — exactly as shown in the populated panel in The VAT Page at a Glance above (Name, Status, VAT Number, Basis, Registration Date, Effective from/to, Scheme, Period, and Period End). You can come back and change them any time with the Edit button, or remove them with Delete.
📌 Enter your VAT details as soon as they come through. Joy Pilot automatically tags every transaction's VAT treatment based on the VAT settings that were in force on that transaction's date. If your settings are already in place, every invoice, expense, and asset you record is correct automatically and falls into the right VAT return. If you add them late, anything you recorded in the meantime is tagged as "not registered" (or with the wrong basis or scheme) and will show up flagged as Needs review on your VAT return — a clean-up job you can avoid entirely by entering your details promptly.
Cash Basis vs Accrual Basis
Your basis decides the single most important question in VAT: at which moment does a sale or purchase count for VAT? That moment is called the tax point. It's worth understanding the difference before you choose, because it affects when you owe VAT and when you can reclaim it.
Cash basis — VAT counts when the money actually changes hands. You account for VAT on a sale in the period you're paid, and you reclaim VAT on a purchase in the period you actually pay it. An unpaid invoice has no VAT effect yet. This is much kinder to cash flow — you never pay HMRC the VAT on an invoice your customer hasn't paid you for — and it's the usual choice for smaller businesses. The trade-off is that you can't reclaim VAT on a supplier bill until you've actually paid it.
Accrual basis (also called standard or invoice accounting) — VAT counts when the invoice is dated, whether or not anyone has been paid. The tax point is the invoice date. This means you may owe HMRC the VAT on a large invoice before your customer has paid you, so you'll need to budget for that — but the upside is you can reclaim VAT on your purchases as soon as you're invoiced, without waiting to pay the supplier.
📌 Note: Choose the basis that matches how HMRC has registered you. If you're unsure, check your VAT registration confirmation or ask your accountant.
Step 2: Connect to HMRC for Making Tax Digital (MTD)
With your VAT settings saved, the VAT Account panel becomes the place where you manage your HMRC connection. Each row tells you something different:
Direct Debit Setup — Whether you've recorded that the business pays HMRC by direct debit. This is for your own records; it doesn't set up an actual direct debit with the bank.
Enrolled for MTD? — Whether the business is set up to file via the HMRC API. New registrations default to Yes (MTD is mandatory for VAT in the UK).
MTD online filing authorisation status — Whether Joy Pilot is currently authorised to talk to HMRC on the business's behalf. This is the row you act on next.
VAT owing: Show account — The VAT currently owing. Click Show account to see the underlying transactions.
When you're enrolled for MTD but haven't yet authorised the connection, the status row shows a red Request now button.
Before you connect, the authorisation status shows Request now.
Click Request now. Joy Pilot hands you over to HMRC's own secure website, where you're asked to allow Joy Pilot to connect.
HMRC asks you to grant Joy Pilot permission to view and change your VAT information.
On the HMRC page:
Click Continue.
Sign in with your Government Gateway user ID and password.
Grant Joy Pilot permission to view and change your VAT information.
📌 Note: You sign in directly on HMRC's website — Joy Pilot never sees your Government Gateway password.
Once you've authorised, HMRC sends you back to Joy Pilot and the status changes to a green ✓ Active. A Show VAT Obligations button also appears, which lets you check directly with HMRC which VAT periods are open or already filed.
Once connected, the status shows ✓ Active and you're ready to file.
📌 Note: HMRC authorisations last about 18 months. Joy Pilot shows a warning roughly a month before yours expires. To renew, click the red trash icon next to Active to remove the old authorisation, then click Request now again and repeat the steps above.
Step 3: Create a VAT Return
With your settings in place and HMRC connected, you can build a VAT return. Start in the VAT Return panel at the top of the page.
Name the return and check the period, then click + Create VAT Return.
Name your return. The convention is the two-digit month and two-digit year in which the period ends. For a period ending 31 July 2026, you'd name it 07 26 (07 = July, 26 = 2026) — even if the period itself started several months earlier. You can type anything you like here (the only rules are no "/" slashes, and each name must be unique), but the month-and-year format keeps your returns tidy and easy to find.
Check the period. Joy Pilot fills in Effective from and Effective to for you. For your first return, the period is worked out from your VAT registration details; for later returns it starts the day after your previous return ended and runs to the end of your next VAT period. You can adjust these dates if you need to.
Click + Create VAT Return.
You're then stepped through three review pages — Sales, Expenses, and Assets — in that order, using the Next button to move forward and Back to return.
Reviewing Sales, Expenses, and Assets
Each review page lists every transaction that falls in the period, colour-coded so you can see at a glance what's going into the return and what needs your attention. The legend at the top of each page is the key, with a running count of each category in brackets:
Colour | Label | What it means |
🟩 Green | Included in this VAT return | The figures on this row feed into this return. |
⬜ Grey | Not included (exempt / outside scope / in a previous return) | The row is exempt, outside the scope of VAT, or was already included in a previous return. |
🟧 Amber | Needs review | The row's VAT settings look wrong (for example, the basis or scheme doesn't match your registration for that date) and should be fixed before you file. |
Sales lists your invoices and credit notes:
The Sales page — green rows are included, amber rows need review. Use the edit pencils to fix anything flagged.
Expenses lists your purchases for the period:
The Expenses page follows the same colour coding and counts.
Assets lists any capital assets:
The Assets page completes the three-step review.
📌 Tip: Work through any amber "Needs review" rows before you move on. Use the edit pencils on each row to correct the transaction or its VAT date stamp. These almost always appear when VAT details were added after the transactions were recorded — see the note about entering your VAT details early in Step 1.
Finalising and Submitting
After the Assets page, the final page brings the whole return together. It shows the nine standard VAT return boxes (VAT due on sales, VAT reclaimed, the net VAT to pay or reclaim, and the totals), with tabs to review the Sales, Expenses, and Assets that make up each figure. Most UK businesses will see 0.00 in the Northern Ireland and EU boxes (2, 8, and 9). When MTD is connected, HMRC has an open obligation for the period, and the period has ended, you'll see a confirmation line and a green Submit online to HMRC button.
The final page shows your VAT figures and, once HMRC confirms an open obligation, the Submit online to HMRC button.
Check the figures, then click Submit online to HMRC to file the return. Joy Pilot sends it straight to HMRC and records it in your filing history.
📌 Note: You can only submit to HMRC once the VAT period has ended. If it hasn't, you'll see a "Cannot file until after [date]" message and a Finalise Return (will NOT be filed with HMRC) button instead. You'll also see Finalise Return if the business isn't filing via MTD, or if HMRC has already fulfilled the obligation — this records the return in Joy Pilot only, without submitting it. (If MTD is on but HMRC shows no matching obligation at all, the Submit online to HMRC button appears greyed-out and disabled.)
Understanding the Rest of the VAT Page
Two panels keep a history of your VAT activity.
Previous VAT Returns
The Previous VAT Returns table at the bottom of the page lists every return you've created or filed, newest first, with its Name, Date, Description, amount Due, and amount Paid. For UK businesses there's also an MTD column with Return and Liabilities buttons on each row, plus a Payments button in the column header — all of which pull the details straight from HMRC.
You can rename a return using the pencil icon next to its name.
You can delete a return only if it was never filed through MTD. Deleting it removes the return and its VAT liability, and frees up all the sales, expenses, and assets it contained so they can be used in a future return. Returns already submitted to HMRC have no delete option, because they can't be unfiled.
Historical VAT Settings
The Historical VAT Settings panel stays empty until your VAT settings change over time. When you add a new set of VAT settings that supersedes an older one — for example, if the business switches scheme or basis, deregisters, or re-registers — the now-superseded record moves here. The table shows each past period's Status, Basis, Scheme, and Effective from / to dates, with a View button to see the full record. Until then, it simply reads "No historical VAT records have been found."