How the VAT Return calculates

Summary

See how the VAT Return calculates in Accounting Start, based on your VAT scheme and the calculations used.

Description

Things to consider

No matter which VAT scheme you use, the date of your transactions determines when they'll appear on your VAT Return. To avoid errors, always enter transactions with the correct dates.

Entering a transaction after its VAT period ended prompts inclusion of late transactions on the next VAT Return.

Resolution

Standard VAT

If you use the Standard VAT scheme, the VAT Return calculates from the VAT element of your

Invoices and credit notes
Money In and Money Out transactions entered through the Banking option
Journals entered into the relevant VAT categories

How the VAT Return calculates

Box 1	The total VAT due, this period on sales – This includes the VAT element of: Sales invoices Sales credit notes – deduct from the value in this box Money paid into the bank with VAT Journals entered into the VAT on Sales category Any purchases made using Reverse charge VAT
Box 2	Only applicable to goods moved under the Northern Ireland protocol. For Northern Ireland businesses, it shows VAT due (unpaid) on goods and services from EU Member States.
Box 3	The total VAT due – This is the sum of boxes 1 and 2.
Box 4	The total VAT reclaimed in this period on purchases – This includes the VAT element of Money paid out of the bank account that includes VAT Journals entered into the VAT on Purchases category Any purchases made using Reverse charge VAT
Box 5	The net VAT due to HMRC or reclaimable by you – This is the difference between boxes 3 and 4.
Box 6	The total net value of your sales, excluding VAT. This includes the purchase of services from EU suppliers and suppliers outside of the EU where reverse charge applies.
Box 7	The total net value of purchases, excluding VAT.
Box 8	Only applicable to goods moved under the Northern Ireland protocol. For Northern Ireland businesses, this shows the total value of sales of goods to VAT-registered EU customers, excluding VAT.
Box 9	Only applicable to goods moved under the Northern Ireland protocol. For Northern Ireland businesses, this shows the total value of purchases of goods from VAT-registered EU suppliers, excluding VAT.

The system automatically calculates VAT based on the country, VAT number, and invoice type of the customer or supplier.

EU trade under the Northern Ireland Protocol only

Boxes 8 and 9 record sales and purchases for Northern Ireland businesses trading with the EU under the Northern Ireland protocol. Related costs, like freight and insurance, should exclude VAT if the're part of the invoice or contract price.

VAT Cash Accounting

On the Cash Accounting Scheme

You pay VAT when you receive a payment from a customer
You reclaim VAT once you pay for your purchases

The VAT Return calculates from the VAT on customer receipts, refunds, money in, money out, and VAT-inclusive journals.

We allocate the VAT amount from outstanding invoices and credit notes to a special VAT holding category until we receive payment. Afterward, we transfer the VAT amount to the VAT on Sales category. Additionally, the VAT rate on a customer receipt always matches the rate on the paid invoice.

For VAT-registered customers or suppliers outside the UK, VAT calculates at invoicing, not at the point of payment. For further information, refer to HMRC VAT Notice 731.

How the VAT Return calculates

Box 1	The total VAT due at this period on sales – This includes the VAT element of Customer receipts Customer refunds – deduct from the value in this box Money In transactions that include VAT Journals entered into the VAT on Sales category When you buy standard-rated or lower-rated services from an EU supplier, the reverse charge VAT also applies.
Box 2	Only applicable to goods moved under the Northern Ireland protocol. For Northern Ireland businesses, it shows VAT due (unpaid) on goods and services from EU Member States.
Box 3	The total VAT due – This is the sum of boxes 1 and 2.
Box 4	The total VAT reclaimed in this period on purchases – This includes the VAT element of: Money Out transactions that include VAT Journals entered into the VAT on Purchases category Box 2 reflects national VAT for EU purchases, while box 1 shows reverse charge VAT for EU standard-rated services.
Box 5	Calculate net VAT owed to HMRC or reclaimable by subtracting box 4 from box 3.
Box 6	The total value of sales, excluding VAT. Tip: This also includes the purchase of services from EU suppliers and suppliers outside of the EU where reverse charge applies.
Box 7	The total value of purchases, excluding VAT.
Box 8	Only applicable to goods moved under the Northern Ireland protocol. For Northern Ireland businesses, this shows the total value of sales of goods to VAT-registered EU customers, excluding VAT.
Box 9	Only applicable to goods moved under the Northern Ireland protocol. For Northern Ireland businesses, this shows the total value of purchases of goods from VAT-registered EU suppliers, excluding VAT.

The system automates VAT treatment based on the country, VAT number, and whether the invoice pertains to goods or services for the customer or supplier.

Flat Rate VAT

We calculate the VAT based on your Flat Rate percentage. This is the percentage you entered when setting up your VAT scheme. You can check in More, Business Settings and then Accounting Dates & VAT.

HMRC will define your flat rate percentage and will notify you of any changes.

On this scheme, you can choose either:

Invoice-based. You pay VAT when you receive invoices similar to the standard VAT scheme
Cash-based. You pay VAT when you pay your invoices, similar to the cash accounting scheme

We calculate the VAT as normal at the standard, lower or zero rates. When you calculate your VAT Return, we adjust the VAT due using your flat rate percentage.

How the VAT Return calculates

Box 1	The total VAT due in this period on sales. This includes The turnover value from box 6 multiplied by the flat rate percentage VAT from the sale of capital assets for which you’ve reclaimed VAT outside of the flat rate scheme.
Box 2	Only applicable to goods moved under the Northern Ireland protocol. For Northern Ireland businesses, it shows VAT due (unpaid) on goods and services from EU Member States.
Box 3	The total VAT due – This is the sum of boxes 1 and 2.
Box 4	VAT reclaimed this period on the purchase of a capital asset outside of the flat rate scheme. It incorporates the notional VAT value in box 2 for EU purchases and reverse charge VAT from box 1 for services.
Box 5	You calculate the net VAT owed to HMRC or reclaimable by subtracting the amount in box 4 from the amount in box 3
Box 6	This value includes: The turnover value of sales, including VAT, used in the flat rate percentage calculation, includes sales outside the EU. The net value of the sale of capital assets outside of the flat rate scheme The sale of services to EU customers and supplies outside the scope of VAT
Box 7	This value includes: The net value of the purchase of capital assets outside of the flat rate scheme. The total value of purchases of goods and services.
Box 8	Only applicable to goods moved under the Northern Ireland protocol. For Northern Ireland businesses, this shows the total value of sales of goods to VAT-registered EU customers, excluding VAT.
Box 9	Only applicable to goods moved under the Northern Ireland protocol. For Northern Ireland businesses, this shows the total value of purchases of goods from VAT-registered EU suppliers, excluding VAT.

How the VAT Return calculates

Summary

Description

Things to consider

Resolution

Standard VAT

How the VAT Return calculates

EU trade under the Northern Ireland Protocol only

VAT Cash Accounting

How the VAT Return calculates

Flat Rate VAT

How the VAT Return calculates

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