Guide to completing a UK VAT return

The following guidance note will provide details on what information needs to be included in each box on the UK VAT return. For businesses using the flat rate scheme the guidance note Guide to completing a UK VAT return for businesses using the Flat Rate Scheme should be used instead.

Box 1: VAT due on sales and other outputs

This is the total amount of VAT charged on sales. UK VAT registered businesses should also include VAT payable to HMRC for certain other supplies made, such as:

• sales to staff, for example canteen meals or via vending machines

• sales of business assets, such as commercial vehicles or machinery

• hiring or loaning of goods

• commission received from selling something on behalf of someone else (agents commission)

• goods or services that have been used by the business or its staff for private/personal use (ie mobile phones, equipment, software, etc)

• gifts or samples given free of charge that cost more than £50 (excluding VAT)

• anything bartered, exchanged or part-exchanged (any goods/services supplied in exchange for non-monetary payment)

• fuel scale charges

• deduct any refunds of VAT made under the Retail Export Scheme

• if the business uses cash accounting scheme, the VAT figure put in this box must be based on payments received, not invoices issued

• if the business uses a retail scheme, include the output tax calculated under the scheme

• the business can include any VAT under-declared/over-declared on previous returns where allowable

• do not include any amounts assessed by HMRC as payable as these will be collected separately by HMRC via an assessment

The total value of any credit notes issued or debit notes received should be included in Box 1.

Box 2: VAT due (but not paid) on acquisitions from other EU countries

The business needs to calculate the total value of the goods purchased from vendors located in other EU countries for the period covered by the VAT return. The value of any services directly related to those goods (such as delivery charges) should also be included in the calculation.

The VAT due on the value of the goods acquired from other EU member states is calculated by multiplying the total amount by the applicable UK VAT rate. Not all goods are liable to VAT at the standard rate of VAT (currently 20%) and if any goods are purchased that would be liable to VAT at the reduced rate or zero-rate of VAT in the UK, the correct VAT rate should be used to calculate the VAT due on the goods purchased.

If the business acquires zero-rated goods (ie books, newspapers or magazines) there is no requirement to pay acquisition tax on these items and the value of these goods should be excluded from the calculation.

Do not include amounts where VAT has been charged by the EU vendor on the goods supplied.

Acquisitions should be included on the return covering the date in which the acquisition actually occurred. This is called the tax point and it is the earlier of either:

• the date of issue of the supplier’s invoice; or

• the 15th day of the month following that in which the goods were sent to the UK

Put the acquisition tax amount in Box 2.

Box 3: total VAT due

This is the total of Box 1 and Box 2 added together. It is the amount of VAT due to HMRC. For returns completed online, this figure is worked out automatically by HMRC.

Box 4: VAT reclaimable on your purchases

This is the VAT charged on purchases made by the business. This box should also include the following:

• VAT paid on imports from countries outside the EU (this figure is obtained from the C79 monthly VAT certificate issued by HMRC)

• VAT paid on goods removed from a bonded warehouse or free zone

• VAT recoverable on goods purchased from vendors in other EU countries and services directly related to those goods (such as delivery charges), this is the figure put in box 2

• if the business is partly exempt, recovery of input tax is subject to the partial exemption rules and any input tax should be recovered based upon the partial exemption calculation undertaken (subject to the partial exemption de mimimis limit)

• recoverable VAT paid under the 'reverse charge' on services purchased from vendors located outside the UK

• tax paid on any purchases of gold under the special accounting scheme for gold (see )

• VAT claimed back as bad debt relief (see and the guidance note Bad debt). The bad debt relief claim should be reduced by the value of any subsequent payment(s) received on a previously written-off VAT bad debt

• businesses using the cash accounting scheme should only recover input tax on payments made and not on invoices received

• exclude amounts notified by Customs and Excise as over-declarations

• exclude amounts paid on assessments or amounts which HMRC already owes the business as these will be repaid via an assessment

• include any VAT under-declared/over-declared on previous returns where acceptable under current HMRC guidelines

Points to remember

Remember:

• to adjust the input tax figure for any non-deductible items, such as business entertainment, motor car expenses, etc

• do not reclaim VAT if the proper supporting documentation (eg a proper VAT invoice) is missing

• if after taking account of errors and adjustments for credit notes etc, the amount to be included in Box 4 is a negative figure, write the amount in brackets. For electronic returns, type in the amount as a negative figure that is preceded by a minus sign

Deductions

Deduct form this total:

• the VAT on any credit notes received from suppliers

• the VAT on any supplier invoices over six months old that have not been paid and the business is obliged to account for as a 'bad debt' for VAT purposes

The result is the total VAT that can be reclaimed from HMRC.

Box 5: VAT payable or reclaimable

Take the figures from Box 3 and Box 4. Deduct the smaller figure from the larger one and put the difference in Box 5. This is calculated automatically for returns submitted online.

If the amount in Box 3 is more than the figure in Box 4, this amount should be paid to HMRC.

If the amount in Box 3 is less than the figure Box 4, the business will reclaim this amount from HMRC.

If the amount in Box 5 is zero, there is no VAT to pay or reclaim, but the return must still be submitted to HMRC.

Box 6: total sales excluding VAT

Enter the total figure for sales (excluding VAT) made during the period covered by the VAT return. The following should also include:

• any zero-rated sales

• any exempt sales

• any amount put in Box 8

• services supplied that are subject to the reverse charge (eg any sales made to VAT registered customers located in other EU countries where no UK VAT has been charged)

• purchases under the special scheme for gold

• services purchased that are subject to the reverse charge

• exports outside the EU

• net value of any road fuel scale charges included in Box 1

• supplies of goods to VAT registered traders in EC Member States

• distance sales of goods to non-VAT registered customers located in other EU countries

• any other business income

• deposits for which an invoice had been issued

• own goods transferred to other EC Member States; and

• supplies to customers in EC Member States on a sale or return basis

If an amount is included in Box 8 on the VAT return then ensure that the same amount is included in Box 6 on the same return.

Take off the net amount of any credit notes issued or debit notes received.

Do not include the following in this box:

• loans, dividends and gifts of money

• insurance claims

Businesses supplying goods and/or services to VAT registered customers located in other EU countries will need to complete and EC Sales List.

Box 7: total purchases excluding VAT

Enter the total figure for purchases (excluding VAT) for the period, including:

• the net value of purchases made by the business (taxable and exempt purchases)

• any services purchased from overseas vendors where the UK reverse charge mechanism needs to be applied

• any amount put in Box 9

• special accounting scheme for gold transactions

• purchases made under the margin schemes applicable to certain supplies of goods within the UK (include the full purchase amount)

• net value of any imported goods where the VAT amount has been included on Box 4 on the return (the business should manually calculate the net value of the imports if it is likely the original purchase invoice issued by the supplier would have been included on a separate VAT return)

Do not include:

• expenses like salaries and taxes (such as PAYE and National Insurance contributions)

• anything 'outside the scope of UK VAT', such as vehicle licences, MOT certificates and local authority rates

• VAT itself

• money put into and taken out of the business

• loans, dividends and gifts of money

• insurance claims

• income which is outside the scope of VAT because it is not consideration for a supply (eg certain grants and compensation payments)

Box 8: the total value of goods supplied to other EU countries

You only need to fill in Box 8 if the business has supplied goods to or acquired goods from another EU country.

Include the total value of goods supplied to another EU country and services related to those goods (such as delivery charges). Please note that services related to those goods should only be included if they form part of the overall value of the goods supplied. If services do not form part of the overall value of the goods themselves (ie they are incidental to the supply of the goods) they should not be included in this box.

The value of all supplies of goods physically removed from the UK to another EU country should be included in this box, even if there was no actual sale, or if the sale was invoiced to a person or organisation outside the EU.

Do not include triangulation transactions where the business has acted as an intermediary in the transaction in this box. See the guidance note Triangulation for more information.

Remember to also include this amount in the Box 6 total.

Box 9: the total value of goods acquired from other EU countries

You only need to fill in Box 9 if the business has supplied goods to or acquired goods from another EU country.

Enter the total value of goods received from VAT registered suppliers in another EU country and services related to those goods (such as delivery charges). Please note that services related to those goods should only be included if they form part of the overall price of the goods (ie the services are ancillary to the goods so form part of the overall cost of the goods). Do not include separately supplied services in this box. The value of all goods that were physically shipped from another EU country, even if there was no actual purchase, or if the goods were invoiced to a person or organisation outside the EU should be included in this box.

Include the following:

• the value of supplies of goods installed or assembled in the UK where those goods have been despatched from another Member State

• the value of acquisitions of process work from other Member States (include only the value of the process work and not the value of the goods themselves)

• distance sales to unregistered customers in another Member State where the value of the distance sales have exceeded the distance selling threshold of that Member State. Do not include distance sales where the business has not exceeded the registration threshold in the country where the goods have been delivered to. However, goods liable to excise duties should always be included in this box

• the value of supplies of new means of transport to unregistered customers in another Member State

Remember to also include the amount shown in Box 9 in the Box 7 total.