How to complete your VAT Return box by box

At the end of each VAT period – usually every three months – you need to complete a VAT Return. A VAT Return tells HM Revenue & Customs (HMRC):

• how much VAT you charged to your customers, and how much you owe to HMRC on other supplies you have made
• how much VAT you are entitled to claim back
• the amount of VAT you must pay to HMRC or the amount of VAT you can get repaid by HMRC
• the total amount of sales and purchases you have made
• the total amount of goods sold to customers or purchased from suppliers in other European Union countries

This guide explains in detail how to complete your return if you are not on the Flat Rate Scheme.

---

How to complete your VAT Return

You must fill in every box on your return – don’t leave any box blank – but you don’t have to fill in box 3 or box 5 of the online return as these are completed automatically for you based on the information you put in boxes 1, 2 and 4. If you need to fill in negative amounts and ‘not applicable’ boxes when submitting your return online you need to:

• put a minus sign before the figure for negative amounts
• enter ‘0.00’ for ‘none’ or ‘not applicable’

How to submit your VAT Return online 

Paper returns

For accounting periods beginning on or after 1 April 2012, you can only submit a paper return if you have been advised that you are exempt from online filing. If you’re filling in a paper return you need to fill in every box and:

• put the figure in brackets ( ) for negative amounts
• write ‘NONE’ for ‘none’ or ‘not applicable’

When filling in your return, you should read the notes on the return, and there’s detailed guidance in VAT Notice 700/12 if you need more information.

Please send your completed return to:

HM Revenue & Customs
VAT Controller
VAT Central Unit
BX5 5AT

Find out about filling in your VAT Return in VAT Notice 700/12 on the HM Revenue & Customs (HMRC) website- Opens in a new window

Flat Rate Scheme

The way you fill out your VAT Return is different if you are on the Flat Rate Scheme.

Find out how to complete your VAT Return if you’re on the Flat Rate Scheme in our guide on Flat Rate Scheme: how to complete your VAT Return box-by-box.

---

How to complete Box 1 to Box 5

Box 1: VAT due on sales and other outputs

This is the total amount of VAT you charged on sales to customers. You must also include the VAT you need to pay to HM Revenue & Customs (HMRC) for certain other supplies that you have 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 to someone else
• commission received from selling something on behalf of someone else
• goods or services, such as products or computer software, that you or your staff take out of the business for personal use
• gifts or samples you gave to someone that cost you more than £50
• anything you bartered, exchanged or part-exchanged
• any goods you bought that the reverse charge procedure applies to
• fuel scale charges

Take away from this total any credit notes you have issued or debit notes you have received and enter the result in Box 1.

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

You need to work out the VAT due – but not yet paid by you – on goods that you buy from other EU countries, and any services directly related to those goods (such as delivery charges). Put the figure in Box 2. You may be able to reclaim this amount, and if so remember to include this figure in your total in Box 4.

Box 3: total VAT due

This is the total of box 1 and box 2 added together. It is the amount of VAT that is due to HMRC.

When you complete your return online, this figure is worked out automatically for you, based on the information you put in boxes 1 and 2. You must not enter the total VAT due figure into box 3 or any other box on your online return.

Box 4: VAT reclaimable on your purchases

This is the VAT you have been charged on your purchases for use in your business. You should also include:

• VAT you paid on imports from countries outside the EU
• VAT you paid on goods you removed from a bonded warehouse or free zone
• VAT due (but not paid) on goods from other EU countries and services directly related to those goods (such as delivery charges) – this is the figure you put in Box 2

Deduct from this total:

• the VAT on any credit notes you have received
• the VAT on any supplier invoices over six months old that you haven’t paid and that you are obliged to account for as a ‘bad debt’

The result is the total VAT you can claim back from HMRC.

Read about relief from VAT on bad debts in VAT Notice 700/18 on the HMRC website- Opens in a new window

Box 5: VAT payable or reclaimable

When you complete your return online, the figure for this box is worked out automatically for you based on the information in boxes 3 and 4. If the amount in box 3 is more than the figure in box 4, you pay the amount in box 5 to HMRC. If the amount in box 3 is less than the figure in box 4, you reclaim the amount in box 5 from HMRC. If the amount in box 5 is zero, you have no VAT to pay or reclaim, but you must still submit your return.

Goods and services where you have to charge VAT

Find out about the reverse charge procedure in VAT Notice 735 on the HMRC website

---

How to complete Box 6 and Box 7

Box 6: your total sales excluding VAT

Enter the total figure for your sales (excluding VAT) for the period, that is, the sales on which you charged the VAT you put in Box 1. Additionally, you should include;

• any zero-rated and exempt sales or other supplies you made
• any amount you put in Box 8
• goods or services you have supplied that are subject to the reverse charge
• gold or services that you have purchased that are subject to the reverse charge
• exports outside the EU

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

Don’t include:

• loans, dividends and gifts of money
• insurance claims

VAT rates explained: standard, reduced, zero, exempt

Reverse Charge Sales List

If you make reverse charge sales – sales to which a reverse charge is applied – you must notify HM Revenue & Customs (HMRC) and send in regular Reverse Charge Sales Lists (RCSL).

Reverse Charge Sales List (RCSL) 

Box 7: your total purchases excluding VAT

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

• the purchases on which you paid the VAT you put in Box 4
• anything you bought that the reverse charge procedure applies to
• any amount you put in Box 9

Don’t include:

• expenses like salaries and taxes
• anything outside the scope of VAT like vehicle licences, MOT certificates and local authority rates

---

How to complete Box 8 and Box 9

You only need to fill in Box 8 and Box 9 if you have supplied goods to or acquired goods from another European Union (EU) country.

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

Put in the total value of goods you 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 invoice total. If these, or any other services, have been invoiced separately they should not be included. You should do this for all goods that were physically removed from the UK to another EU country, even if there was no actual sale, or if the sale was invoiced to a person or organisation outside the EU.

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

You may also have to complete an EC Sales List for supplies to VAT-registered customers in other EU countries.

You should not include in box 8 the value of goods supplied to customers (including private individuals) who are not registered for VAT where you have not exceeded the ‘distance selling’ threshold. Each EU country can set its own distance selling threshold which at present must be roughly the equivalent of either €35,000 or €100,000.

Reporting your EU sales using the EC Sales List (ESL)

Find out about distance selling in the page on VAT on sales to someone who isn’t VAT registered in another EU country in our guide on exports, dispatches, supplying goods abroad: charging VAT.

Find the distance selling thresholds for each EU country on the European Commission website- Opens in a new window 

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

Enter the total value of goods you 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 invoice total. If these, or any other services, have been invoiced separately they should not be included. You should do this for all goods that were physically shipped to you 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.

Remember to also include this amount in your Box 7 total.

---

VAT rate changes

If the VAT rate changes, you complete your VAT Return in exactly the same way. If the rate changes during your return period, you calculate a total for each rate and just add them together to get the figures that go in each box.

Increase in the standard of rate of VAT to 20 per cent

Accounting for VAT when the standard rate of VAT returned to 17.5 per cent

---

CASE STUDY

Here’s how I got to grips with VAT

Based in London, Harley Street Cosmetic is a range of innovative plant-based skincare products and natural perfumes, developed by the company’s founder and owner, Dr Cuross Bakhtiar. From the start, Cuross was determined to keep a close eye on the business’ finances. Here he talks about why he decided to register for VAT early, the importance of setting up an effective record-keeping system and what to consider when choosing a software package.

WHAT I DID

Gather information

“While my background and core skills lie in medical research, plant chemistry and product development, I also wanted to understand and control the operational side of things, especially the finances. One area I knew I had to get to grips with was VAT.

“I attended two of HMRC’s VAT workshops, which were very beneficial, not least because I was able to talk to other business owners about how they approach VAT and pick up useful tips. The workshops also proved to be an unexpectedly good networking exercise!

“There’s plenty of guidance available online if you know where to look.”

Decide which VAT scheme to use

“I decided early on that the company should voluntarily register for VAT, rather than waiting until the turnover made it compulsory. One advantage of this was that we could reclaim some of the input tax (the VAT charged on purchases made by the company), which I had calculated could be a considerable amount. Another advantage of being VAT registered is that it helps project a professional image, which is important in the cosmetics industry because many people are wary of newcomers.

See our guide on when to register for UK VAT.

“We sell our products direct to the consumer, so I considered the various VAT retail schemes, which provide an alternative to traditional VAT accounting rules. However, I decided against using one.

Set up a record-keeping system

“If you want to keep on top of the VAT, good record-keeping is essential. I bought in computer software, recommended by a former colleague, to streamline the process.

“It certainly made filing my first VAT return easier, as it generates a VAT summary and all the other figures required by HMRC.

“I try to enter things into the system as soon as possible to ensure that nothing’s overlooked and that any management information generated is as accurate and up to date as possible. Having a good system also makes it easier to tackle the more complex areas of VAT. For example, the natural oils we use have different VAT treatments according to whether they are classified as a raw material or a food product by HMRC. That’s a lot easier to manage when I can see all the figures at a glance.”

WHAT I’D DO DIFFERENTLY

Use the same software package as the accountants

“Computerising the VAT accounts has been a huge benefit, but looking back, it would have been better to buy the same software that our accountants use. Even if you do the day-to-day bookkeeping yourself, you may have to send it to your accountant at some point, and using the same software makes it easier to transfer information.”