The boxes on the VAT Return are
primarily driven from the details of sales and purchase transactions
undertaken by the business that fall within the return period.
The total amount of output VAT collected
by the business on sales is compared to the total amount of input
VAT incurred in order to arrive at the net payment or repayment
of VAT required.
Details of these transactions will
typically be exported from an accounting system, and rules apply
as to which types of transactions are included on the VAT Return
and in which return period.
Certain categories of transactions
are subject to specific treatment in respect of the boxes used
on the VAT Return. AlphaVAT presents calculation blocks for the
following:
Calculation
name |
Return
boxes |
Description
of treatment of the supply and effect on the VAT Return |
Output
VAT |
Sales |
1
& 6 |
General
sales of goods and services subject to VAT. The net value
of the supply is returned in box 6 of the VAT Return,
and output VAT is returned in box 1.
|
Exports |
6 |
Goods
supplied to customers located outside of the EU. As VAT
is intended to be a tax levied on goods and services consumed
in the EU, such supplies should be zero-rated provided
that the relevant conditions have been met.
The
conditions relate to obtaining appropriate evidence, within
a specified time limit, that the supply is a genuine export
and so is entitled to be zero-rated. Where the conditions
upon such a supply are not met, VAT should be accounted
for under the normal rules. Refer to VAT Notice 703 for
further details on exports.
The
net value of the supply is returned in box 6
of the VAT Return. The supply will normally be zero-rated
and so VAT would not be relevant, but where VAT was charged
this will be returned in box 1.
|
Distance
sales |
1
& 6 |
Goods
supplied to customers located in another EU member state
who are not VAT-registered. The basic rule is that such
supplies are accounted for as normal sales in the member
state from which the goods are dispatched.
However,
each EU member state applies an annual distance selling
threshold; where the value of supplies to a member
state within the preceding 12 months exceeds the
relevant threshold, the supplier will be obliged to register
for VAT in that member state. The place of supply then
moves to the member state of arrival. Refer to VAT Notice 725 section 6 for
further details on distance selling.
The
net value of the supply is returned in box 6 of the VAT
Return, and output VAT is returned in box 1.
|
Dispatches |
6
& 8 |
Goods
supplied to VAT-registered businesses located in another
EU member state. As a simplification measure, VAT
is self-accounted for by the customer; the customer acts
as both the supplier and the recipient (refer to
Acquisitions below). Such supplies should therefore be
zero-rated provided that the relevant conditions have
been met.
The
conditions include obtaining the VAT registration number
of the recipient, and obtaining evidence, within a specified
time limit, that the goods have been removed from the
UK and transported to another EU member state. Where
the conditions upon such a supply are not met, VAT should
be accounted for under the normal rules. Refer to VAT Notice 725 section 4 for
further details on dispatches.
The
net value of the supply is returned in box 6
of the VAT Return and also in box 8. The supply will normally
be zero-rated and so VAT would not be relevant, but where
VAT was charged this will be returned in box 1.
|
Input
VAT |
Purchases |
4
& 7 |
General
purchases of goods and services subject to VAT. The
net value of the supply is returned in box 7 of the VAT
Return, and input VAT is returned in box 4 subject to
partial exemption recovery.
|
Imports |
4
& 7 |
Goods
purchased from suppliers located outside of the EU. Import
VAT will be charged by customs in order for the goods
to be cleared at the border.
Import
VAT is not collected through the VAT Return process, however
it can be recovered on the VAT Return subject to a form
C79 being held as evidence of payment. Refer to VAT Notice 702 for
further details on imports.
The
net value of the supply is returned in box 7 of the VAT
Return, and input VAT is returned in box 4 subject to partial
exemption recovery.
|
Acquisitions |
2,
4, 7, & 9 |
Goods purchased from
VAT-registered businesses located in another EU member
state. As a simplification measure, VAT is self-accounted
for by the customer; the customer acts as both the supplier
and the recipient (refer to Dispatches above).
Acquisition
tax is accounted for at the rate applicable to the goods
under the VAT rules in the member state of arrival, i.e.
at the rate which would be applicable on an identical
supply within the UK, which may be zero or exempt. Refer
to VAT Notice 725
section 7 for further details on acquisitions.
The
net value of the supply is returned in box 7
of the VAT Return and also in box 9. The self-accounted output
VAT is returned in box 2, and may be recovered in box
4 subject to partial exemption recovery.
|
Reverse
charge |
1,
4, 6, & 7 |
Services
received from suppliers located outside of the UK. As
a simplification and anti-fraud measure, VAT is self-accounted
for by the customer; the customer acts as both the supplier
and the recipient.
Tax is
accounted for at the rate applicable to the services under
the UK VAT rules, i.e. at the rate which would be applicable
on an identical supply within the UK, which may be zero
or exempt. Refer to VAT
Notice 741A section 5 for further details on
reverse charge.
The
net value of the supply is returned in box 6
of the VAT Return and also in box 7. The self-accounted
output VAT is returned in box 1, and may be recovered
in box 4 subject to partial exemption recovery.
|
Domestic
reverse charge |
1,
4, & 7 |
Specified
goods and services purchased from suppliers located in
the UK. As an anti-fraud measure, VAT is self-accounted
for by the customer. The supplier should not charge
output VAT.
Specified
goods comprise mobile phones, computer chips, and wholesale
gas and electricity, whilst specified services comprise
emission allowances, wholesale telecommunications, and
(from 1 March 2021) certain building
and construction services. Refer to VAT
Notice 735 for further details on domestic reverse
charge.
The
net value of the supply is returned in box 7
of the VAT Return. The self-accounted output VAT
is returned in box 1, and may be recovered in box 4 subject
to partial exemption on recovery. Note
that in contrast to the cross-border reverse charge, the
net value of the supply is accounted for by the supplier
rather than the customer in box 6 of the VAT Return.
|
Postponed
VAT accounting |
1,
4, & 7 |
From
1 January 2021, if your business is registered for VAT
in the UK, you will be able to account for import VAT
on your VAT Return for goods you import into:
Great Britain (England,
Scotland and Wales) from anywhere outside the UK Northern Ireland from
outside the UK and EU
The
net value of the supply is returned in box 7 of the VAT
Return. The VAT due in this period on imports accounted
for through postponed VAT accounting is returned in box
1, and may be recovered in box 4 subject to partial exemption
on recovery.
|
Blocked
inputs |
7
|
Any
purchases of goods and services for which input tax is
blocked from being recovered under any circumstances.
Examples include business entertaining, certain motor
expenses, and private use or non-business expenditure.
Refer to Reclaiming
VAT for further details on blocked inputs.
The
net value of the supply is returned in box 7
of the VAT Return. Input VAT amounts will not form part
of the VAT Return for the period. This calculation block
should not be used for outputs.
|
General |
Excluded
transactions |
None |
Any
transactions which are to be excluded from the VAT Return
for any reason. Net and VAT amounts will not form part
of the VAT Return for the period. This calculation block
may be used for either outputs or inputs.
|
Note that AlphaVAT does not provide
a specific calculation block for cross-border supplies of services.
Such supplies to business customers are subject to VAT where the
customer is based under the place of supply rules (refer to Reverse
charge above) and so are outside the scope of UK VAT.
The net value of the supply is returned
in box 6. For supplies to non-business customers the place of
supply is where the supplier is located, irrespective of the location
of the customer, and so VAT would be charged as normal. Refer
to VAT Notice 741A section
6 for further details on the place of supply rules for
services. The normal Sales calculation block should be used in
both cases. |
