This guide walks through each box on the return, explains what goes where, and flags the mistakes that catch people out.
What Is a VAT Return & Who Has to Submit One?
A VAT return is a report you submit to HMRC showing the VAT you charged on sales and the VAT you paid on purchases during a set period. If you are VAT-registered, you must submit a return for every period even if there is nothing to pay or reclaim (a nil return).
Most returns cover three months. For example, a period ending 31 March 2026 runs from 1 January to 31 March 2026, and the deadline to submit and pay is 7 May 2026 (one month and 7 days after the period ends).
Making Tax Digital: How VAT Returns Are Submitted
Most VAT-registered businesses must submit VAT returns using Making Tax Digital (MTD) compatible software. Since April 2022, this applies to all VAT-registered businesses, and you can no longer submit returns manually through the HMRC portal. Returns must be sent digitally via accounting or bridging software linked to your records.
Exemptions are limited and apply only in specific cases, such as lack of internet access or religious reasons. If you do not follow MTD rules, HMRC may charge penalties under its standard compliance system.
Understanding the Key Terms Before You Start
A few definitions make the rest of this much clearer.
- Output VAT is the VAT you charge your customers on sales.
- Input VAT is the VAT you pay on purchases from your suppliers.
Your return calculates the net position: output minus input. If output is higher, you pay the difference to HMRC. If input is higher, HMRC repays you.
The tax point is the date a supply is treated as taking place. This determines which VAT period your account for the transaction in, unless you use the Cash Accounting Scheme.
How to Fill in Each Box on Your VAT Return
Box 1: VAT Due on Sales and Other Outputs
Enter the total VAT you owe on all sales and other taxable supplies made during the period. This is your output VAT.
As well as standard sales, include VAT on:
- Goods taken for private use
- Business gifts over £50 (excluding VAT)
- Fuel scale charges
- Reverse charge VAT (where applicable)
- Supplies to staff and non-cash transactions
Do not include VAT on zero-rated supplies, such as exports.
Before submitting, subtract any VAT from credit notes issued to customers.
For example,
If you charged £10,000 VAT on sales and issued £500 in credit notes, your Box 1 total is £9,500.
Box 2: VAT Due on EU Acquisitions (Northern Ireland Only)
Box 2 is used by VAT-registered businesses in Northern Ireland that purchase goods from EU member states. If your business is based in England, Scotland, or Wales, you will normally enter 0.00 in this box.
Enter the VAT due on EU purchases (acquisition VAT) using the UK VAT rate, as if the goods were bought in the UK. The VAT should be included in the period based on the tax point: the earlier of the
- supplier’s invoice date or
- the 15th day of the month after dispatch.
In most cases, you can reclaim this VAT in Box 4, provided the purchases are for taxable business use.
Box 3: Total VAT Due
Add boxes 1 and 2 together. This is your total output VAT for the period. Your software will calculate this automatically.
Box 4: VAT Reclaimed on Purchases and Other Inputs
Enter the total input VAT you can reclaim on business purchases and expenses during the period. You must hold valid VAT evidence (such as a VAT invoice) to support your claim.
You can include VAT on:
- Business purchases and expenses used for taxable activities
- Import VAT (including postponed VAT accounting)
- Goods acquired from the EU into Northern Ireland
- Reverse charge transactions
- Bad debt relief (for debts over 6 months old, if conditions are met)
Do not include VAT on:
- Items for personal use
- Business entertainment costs
- Goods bought under VAT margin schemes
Before submitting, deduct any VAT shown on credit notes from suppliers.
For example,
If your total input VAT is £6,000 and you received £200 in credit notes, your Box 4 figure is £5,800.
Box 5: Net VAT to Pay or Reclaim
Box 5 shows the net VAT you owe to HMRC or the amount you can reclaim.
To calculate it, take the figures from Box 3 and Box 4 and subtract the smaller from the larger.
- If Box 3 is higher than Box 4, you must pay the difference to HMRC
- If Box 4 is higher than Box 3, HMRC will repay the difference to you
For example,
£9,500 (Box 3) − £5,800 (Box 4) = £3,700 payable to HMRC
When completing the return, Box 5 is shown as a positive figure only, even if it represents a repayment.
Box 6: Total Value of Sales and Outputs (Excluding VAT)
Enter the total value of all your sales and business income, excluding VAT. This represents your total turnover for the period.
Include the value of all taxable sales (standard-rated, reduced-rate, and zero-rated), as well as exports and reverse charge sales.
Do not include VAT, loans, capital introduced, or non-business income such as dividends or insurance pay-outs.
For example,
£50,000 sales + £5,000 exports = £55,000
Box 7: Total Value of Purchases and Inputs (Excluding VAT)
Enter the total value of all your business purchases and expenses, excluding VAT.
Include:
- All business purchases and costs
- Imports and goods from the EU into Northern Ireland
- Reverse charge transactions
Do not include:
- Wages, PAYE, or National Insurance
- Money taken out of the business (drawings)
- Non-business costs or expenses that are not for VAT-eligible business use (for example, personal expenses or items with no VAT to reclaim)
Total Value of Supplies to EU Member States (Northern Ireland Only)
This box is only used by businesses in Northern Ireland that send goods to EU member states. Businesses in England, Scotland, and Wales will usually enter 0.00.
Enter the total value of goods dispatched from Northern Ireland to the EU, including any related costs (like transport or insurance), excluding VAT.
The value you enter here must also be included in Box 6.
Box 9: Total Value of Acquisitions from EU Member States (Northern Ireland Only)
This box is only used by businesses in Northern Ireland that buy goods from EU member states. Businesses in England, Scotland, and Wales will usually enter 0.00.
Enter the total value of goods you received from the EU, including any related costs (such as transport or insurance), excluding VAT.
The amount entered in Box 9 must also be included in Box 7.
Filling in Your VAT Return: Special Schemes
If you use the Flat Rate Scheme, you apply a fixed percentage to your VAT-inclusive turnover instead of working out input and output VAT separately. You enter this amount in Box 1 and usually cannot reclaim input VAT, except for capital assets costing over £2,000 (including VAT). Box 6 should include your total turnover including VAT.
Under the Cash Accounting Scheme, you record VAT based on payments rather than invoices. Box 1 is based on money received, and Box 4 is based on money paid. The same approach applies to Boxes 6 and 7. However, imports and EU purchases must still be accounted for using normal VAT rules.
With the Annual Accounting Scheme, you submit one VAT return per year and make advance payments during the year. You complete all boxes as usual for the full year, do not include interim payments in Box 5, and the deadline is two months after the end of the VAT period.
If you use the Margin Scheme for second-hand goods, VAT is calculated only on your profit margin. Box 1 shows the VAT on the margin, Box 6 shows the selling price (excluding VAT on the margin), and Box 7 shows the purchase price.
Under the Reverse Charge, the customer accounts for VAT instead of the supplier. If you are the buyer, you include VAT in both Box 1 and Box 4 and record the purchase value in Box 7. If you are the seller, you include only the sale value in Box 6.
Common VAT Return Mistakes to Avoid
A common mistake is not accounting for VAT on the full value of a sale, such as part exchange deals. You must calculate VAT on the total value, not just the cash received. Another error is including non-business items in Box 7, such as wages, drawings, or loan repayments, which should not be reported as purchases.
Businesses also often mix up Boxes 8 and 9. Box 8 is for goods sent from Northern Ireland to the EU, and Box 9 is for goods received from the EU into Northern Ireland. Finally, do not include amounts already assessed by HMRC, as errors must be corrected using HMRC’s official process.
How to Correct Errors from Previous VAT Returns
You can correct VAT errors from the last 4 years in your next return if they are small enough. This applies when the net error is:
- £10,000 or less, or
- Between £10,000 and £50,000, and less than 1% of your total sales (Box 6)
If your error is within these limits, you can fix it in your next VAT return. Add any underpaid VAT to Box 1, or any overpaid VAT to Box 4, and keep records explaining what happened.
If the error is over £50,000, or over £10,000 and more than 1% of Box 6, you must report it to HMRC separately instead of adjusting your return. The same applies to deliberate errors, which must always be reported separately.
Before You Submit: Quick VAT Return Checklist
Before submitting your VAT return, check the following:
Payment check:
After Submitting Your VAT Return
After submitting your VAT return, check your VAT online account to confirm HMRC has received it and to see your next deadline.
If you miss a return, HMRC may issue an estimated assessment. You should submit your correct return as soon as possible. If the estimate is too low and you do not correct it within 30 days, you may face additional penalties.
Conclusion
A VAT return has nine boxes, with Box 5 showing the final amount you owe or can reclaim. Getting this right depends on keeping accurate records, understanding input and output VAT, and applying the correct VAT scheme. Always submit and pay VAT bill on time, keep proper documentation for Box 4 claims, and correct any past errors promptly using HMRC’s process.
Need help?
VAT returns can be complex. UKPA can help you file accurately, stay compliant, and save time.
Frequently Asked Questions
Moderate. Easy if your records are accurate and simple; harder if you have complex transactions. Mistakes can lead to penalties.
To prepare your VAT return, you must keep digital records under Making Tax Digital (MTD) rules and calculate the VAT on your sales (output tax) and purchases (input tax) for the period. You then complete the 9-box VAT return, check it for accuracy, and submit it using HMRC-compatible software. Any VAT due must be paid, usually within one month and seven days after the end of the VAT period.
Yes, you can complete and submit your VAT return yourself. HMRC allows businesses to file returns using their online service or Making Tax Digital (MTD)-compatible accounting software. However, you are responsible for keeping accurate records, applying the correct VAT rules, and ensuring the return is submitted on time, as any errors or late submissions may result in penalties.
HMRC does not specify how long a VAT return takes, as it depends on your business complexity and record-keeping. Returns are usually submitted quarterly and must meet the deadline (typically one month and seven days after the period end).
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