You would continue to pay and reclaim input VAT (purchase VAT) as you do today. The difference is you will no longer be collecting output VAT (sales VAT) on behalf of HMRC and paying it over to them through your VAT Return.

Although you are no longer offsetting input VAT with output VAT, the net effect is the same. If the input VAT you can claim is greater than the output VAT you owe, you'll be due a repayment of VAT from HMRC. This is known as a 'repayment return'.

It may be worth also considering HMRC guidance on switching to monthly VAT returns if your returns result in you reclaiming VAT.

Refer to HMRC guidance >