Key takeaways
- Returns and payment are due one calendar month and seven days after the end of each VAT period, and must be filed through Making Tax Digital compatible software.
- Boxes 1 to 5 hold VAT amounts in pounds and pence; boxes 6 to 9 hold net values, excluding VAT, in whole pounds.
- Reverse charge and postponed import VAT go in both box 1 and box 4, so they usually net to nil for a fully taxable business.
- Errors with a net value under £10,000 (or up to £50,000 if no more than 1% of box 6) can be corrected on your next return if they were not deliberate.
- You must file a return for every period, even if there is nothing to declare.
A VAT return is a summary, for one VAT period, of the VAT you charged, the VAT you are reclaiming and the net values behind both figures. Most businesses file quarterly, through software, and the return itself takes minutes once the records behind it are right. This guide goes through each box, the entries that cause most mistakes, and what to do when you find an error.
Before you start: get the records right
The return is only as good as the bookkeeping behind it. Before you file:
- Reconcile your bank accounts for the whole period so every sale and purchase is recorded.
- Check purchase invoices. You can only reclaim input VAT you hold a valid VAT invoice for, and only on costs used for your taxable business.
- Check the tax point of sales near the period end. Under standard accounting VAT is due on the invoice date (or payment date, if earlier), not when the customer pays.
- Review unusual items: purchases from abroad, construction services, fuel, cars, entertaining and anything bought partly for private use.
- Make sure the right scheme is applied. The Cash Accounting Scheme and the Flat Rate Scheme change what goes into the boxes.
Under Making Tax Digital for VAT the figures must flow digitally from your records to HMRC. Your software usually builds the return for you, so most of the work is checking it.
The nine boxes explained
| Box | What it shows | Format |
|---|---|---|
| 1 | VAT due on sales and other outputs | £ and pence |
| 2 | VAT due on acquisitions of goods into Northern Ireland from the EU | £ and pence |
| 3 | Total VAT due (box 1 plus box 2) | £ and pence |
| 4 | VAT reclaimed on purchases and other inputs | £ and pence |
| 5 | Net VAT to pay HMRC or reclaim (difference between boxes 3 and 4) | £ and pence |
| 6 | Total value of sales and all other outputs, excluding VAT | Whole £ |
| 7 | Total value of purchases and all other inputs, excluding VAT | Whole £ |
| 8 | Total value of goods supplied from Northern Ireland to the EU, excluding VAT | Whole £ |
| 9 | Total value of goods acquired into Northern Ireland from the EU, excluding VAT | Whole £ |
Box 1: VAT due on sales
The output VAT you charged, or should have charged, on sales in the period. It also includes VAT you account for yourself, such as:
- reverse charge VAT on services bought from overseas suppliers
- postponed import VAT on goods brought into Great Britain
- VAT on construction services you received under the domestic reverse charge
- fuel scale charges, if you reclaim all fuel VAT and use the scale charge for private motoring
- VAT on goods you take out of the business for private use
Boxes 2, 8 and 9: Northern Ireland only
Since 1 January 2021 these boxes apply only to businesses moving goods between Northern Ireland and the EU. A business in England, Scotland or Wales trading with the EU normally leaves boxes 2, 8 and 9 at zero, even when it imports or exports goods.
Box 4: VAT reclaimed on purchases
Input VAT on business purchases and expenses, supported by valid VAT invoices. Include the matching amounts for reverse charge, postponed import VAT and domestic reverse charge entries that you put in box 1, and any bad debt relief you are entitled to claim. Our guide to reclaiming VAT on business expenses covers which costs qualify.
Box 5: the net figure
Box 5 is box 3 minus box 4. If box 3 is larger you pay HMRC. If box 4 is larger HMRC repays you, usually within about 10 days of receiving a correct return, although new businesses and unusual claims are often checked first.
Box 6: total sales, excluding VAT
All your sales and outputs for the period, net of VAT: standard-rated, reduced-rate, zero-rated and exempt supplies, exports, and the net value of supplies of services to overseas business customers. Leave out VAT itself, wages, dividends, loans, grants and money that is outside the scope of VAT such as insurance claims received.
Box 7: total purchases, excluding VAT
All purchases and expenses net of VAT, including imports and zero-rated or exempt purchases. Leave out wages and salaries, PAYE and National Insurance, money taken out as drawings, loan repayments and VAT itself.
Entries that cause most errors
| Transaction | What to enter |
|---|---|
| Services bought from an overseas business (reverse charge) | VAT at the UK rate in box 1 and box 4; net value in box 6 and box 7 |
| Goods imported into Great Britain using postponed VAT accounting | Import VAT in box 1 and box 4; value of imports in box 7 |
| Construction services received under the domestic reverse charge | VAT in box 1 and box 4; net value in box 7 only |
| Construction services you supply under the domestic reverse charge | Net value in box 6 only; no output VAT in box 1 |
| Exports of goods (zero-rated) | Net value in box 6; nothing in box 1 |
| Bad debt relief | The VAT you originally paid on the unpaid invoice, in box 4 |
Postponed import VAT figures come from your monthly postponed import VAT statement, which you download from the Customs Declaration Service. Our VAT on imports and exports and reverse charge guides explain the rules in more detail.
If you use the Flat Rate Scheme
Box 1 holds your flat rate percentage applied to VAT-inclusive turnover. Box 6 holds your flat rate turnover including VAT. Box 4 is used only for VAT on capital assets costing more than £2,000 including VAT. Box 7 still shows your purchases.
Deadlines and payment
The return and any payment are due one calendar month and seven days after the end of the VAT period. For a quarter ending 30 June, the deadline is 7 August.
| Payment method | Timing |
|---|---|
| Direct Debit | HMRC collects 3 working days after the deadline (set it up at least 3 working days before you file) |
| Faster Payments, CHAPS or online banking | Must reach HMRC by the deadline; Faster Payments usually arrive the same or next day |
| Bacs | Allow 3 working days |
Businesses on the Annual Accounting Scheme file once a year, two months after the year end, and make interim payments during the year. Very large businesses with an annual VAT liability above £2.3 million make monthly payments on account.
Late returns attract penalty points and late payments attract penalties and interest. Our VAT penalties guide explains how they work.
Correcting a mistake on an earlier return
You can correct an error on your next VAT return, by adjusting box 1 or box 4, if the error was not deliberate and its net value is either:
- £10,000 or less, or
- between £10,000 and £50,000 and no more than 1% of the box 6 figure on the return for the period in which you find the error
Larger or deliberate errors must be reported to HMRC separately, online or on form VAT652. You can correct errors going back four years. Keep a note of how you calculated the adjustment, because HMRC may ask for it.
Checklist before you press submit
- Box 5 is plausible compared with previous quarters; investigate any big movement.
- Box 6 roughly matches your sales for the period in your accounts.
- Reverse charge and import entries appear in both box 1 and box 4.
- No VAT has been reclaimed on blocked items such as business entertaining or most car purchases.
- Payment is arranged for the deadline, or Direct Debit is set up in time.
Frequently asked questions
Do I need to file a VAT return if I made no sales?
Yes. You must file a return for every period while you are registered, even if every box is zero. A nil return filed late still counts as a late submission for penalty points.
Can I still file my VAT return on the HMRC website?
Almost all VAT-registered businesses must now file through Making Tax Digital compatible software. HMRC’s online form is only available to businesses with an exemption from Making Tax Digital.
Why are boxes 2, 8 and 9 zero on my return?
They only apply to goods moving between Northern Ireland and the EU. Businesses in Great Britain record imports and exports elsewhere on the return, mainly in boxes 1, 4, 6 and 7.
When will HMRC pay a VAT repayment?
Most repayments are made within about 10 days of HMRC receiving the return, to the bank account HMRC holds for you. Large or unusual claims may be checked before payment, and HMRC pays repayment interest if it takes unreasonably long.
What if my accounting software gives a different figure from my spreadsheet?
The figure submitted must come from your digital records through a digital link. Find the reason for the difference, usually a missing or duplicated transaction or a wrong VAT code, and correct the records rather than overriding the return.
Sources
Rates, thresholds and rules in this guide were checked against HMRC and GOV.UK guidance in October 2026. Tax rules change, so check the current position on GOV.UK or with a qualified adviser before acting. This guide is general information, not personal advice.