The VAT return is calculated based on the VAT information you’ve added onto your transactions, along with the VAT scheme you’re on, and the information in your VAT settings. Any transactions that you’ve marked as ‘Excluded from VAT return’ will not be reported anywhere on your VAT return. The other VAT treatments that you have applied to your transactions will feed into the calculations to populate the boxes on your tax return, as explained below:
- Box 1 – VAT due on all income transactions and other outputs (which includes reverse charge VAT).
- Box 2 – VAT due on acquisitions from the EU.
- Box 3 – the total VAT due (i.e. the sum of boxes 1 and 2).
- Box 4 – the VAT reclaimed on expense transactions and other inputs (including acquisitions from the EU and reverse charge VAT). It can include any input VAT on an expense transaction that you’ve identified as recoverable VAT or as a taxable purchase of services from outside the UK.
- Box 5 – the net VAT to be paid to HMRC or reclaimed by you from HMRC (i.e. the difference between boxes 3 and 4).
- Box 6 – the total value of net income (i.e. total sales and all other outputs), excluding any VAT.
- Box 7 – the total value of expense transactions and all other inputs, excluding any VAT.
- Box 8 – the total value of all supplies of goods and related costs, excluding any VAT to the EU.
- Box 9 – the total value of acquisitions of goods and related costs, excluding any VAT from the EU.
If you’re on the Flat Rate Scheme, your flat rate percentage will be applied in the required boxes. Any expense transactions that are not subject to specific international rules or capital good rules will not be reported on your VAT return.