VAT

How to complete your VAT return

Step-by-step guidance on what to include in each box of your VAT return. Covers boxes 1-9, rounding rules, common mistakes to avoid, submission deadlines, and how to submit using Making Tax Digital software.

UK-wide Updated 16 Feb 2026

Guide summary

You must submit a VAT return every 3 months. Add up the VAT you charged your customers and the VAT you paid on business purchases. The difference is what you owe HMRC or can reclaim. Submit it online using Making Tax Digital software within 1 month and 7 days after the quarter ends.

Submit your VAT return every 3 months
Use Making Tax Digital software to submit online
Deadline is 1 month and 7 days after quarter ends
Box 1: VAT you charged on sales
Box 4: VAT you paid on business purchases
Box 5: Subtract box 4 from box 3 for net amount
Pay HMRC if box 5 is positive
Reclaim refund if box 5 is negative
Keep sales and purchase records to complete return
Check for errors to avoid penalties

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Every VAT-registered business must submit regular VAT returns to HMRC - usually quarterly. The return tells HMRC how much VAT you have charged on your sales (output tax) and how much VAT you have paid on your purchases (input tax). The difference is either VAT you owe to HMRC or VAT you can reclaim.

Getting your VAT return right is important. Errors can result in penalties, interest charges, or HMRC enquiries. This guide explains what goes in each of the 9 boxes on the VAT return and how to avoid common mistakes.

Before you start

You will need:

Your sales records showing VAT charged (output tax)
Your purchase invoices showing VAT paid (input tax)
Your VAT account summary for the period
MTD-compatible software linked to your HMRC account

Make sure your records are complete before starting. Missing invoices or incomplete records are a common cause of VAT return errors.

Understanding the 9-box VAT return

The VAT return has 9 boxes divided into two sections:

Boxes 1-5: VAT amounts in pounds and pence
Boxes 6-9: Values of supplies and purchases excluding VAT (whole pounds only)

Boxes 3 and 5 are calculated automatically - box 3 adds boxes 1 and 2; box 5 subtracts box 4 from box 3.

VAT amounts (boxes 1-5)

These boxes deal with actual VAT amounts - the tax you have charged and the tax you can reclaim.

Box 1: VAT due on sales and other outputs

This is the total VAT you have charged on your sales during the period. Include:

Box 1 - VAT due on sales and other outputs

What to include in box 1 of the VAT return - VAT charged on sales.

Box 1 purpose: VAT due on sales and other outputs for the period
Include - Standard-rated sales: VAT charged at 20% on goods and services sold
Include - Reduced-rated sales: VAT charged at 5% on eligible supplies (e.g., domestic fuel)
Include - Self-supply VAT: VAT on goods taken from business for personal use
Include - Reverse charge VAT (you received): VAT on services received from abroad where you must account for the VAT
Include - Corrections: Net increase in VAT due from errors on previous returns (if not using separate error correction)
Exclude - Zero-rated sales: No VAT to include (rate is 0%)
Exclude - Exempt supplies: Outside scope of VAT - nothing to report in box 1

Key points for box 1

Include all VAT you have charged or should have charged during the period
Include VAT on any supplies where you have issued a VAT invoice, even if not yet paid
For cash accounting scheme users, include only VAT on payments actually received

Box 2: VAT due on acquisitions from EU member states

Since Brexit, this box is mainly relevant for Northern Ireland businesses only. If you are based in Great Britain, this will usually be zero.

Box 2 - VAT due on acquisitions from EU member states

What to include in box 2 of the VAT return - EU acquisitions (now mainly Northern Ireland only).

Box 2 purpose: VAT due on acquisitions of goods from EU member states
Post-Brexit (Great Britain): Generally zero - EU goods now imported via customs, VAT accounted for at border or via postponed accounting
Northern Ireland businesses: Include VAT due on goods acquired from EU under the Windsor Framework
Calculation: Apply UK VAT rate to the value of goods acquired
Related box: Also include the same VAT amount in box 4 to reclaim as input tax (if eligible)

Post-Brexit changes

Since 1 January 2021, box 2 is mainly relevant for Northern Ireland businesses receiving goods from EU member states under the Windsor Framework. For Great Britain businesses, EU goods are now imports and VAT is accounted for differently (usually at the border or via postponed VAT accounting).

Box 3: Total VAT due

This is simply box 1 plus box 2. Your MTD software will calculate this automatically. If this figure seems wrong, check boxes 1 and 2 for errors.

Box 3 - Total VAT due

Box 3 is the sum of boxes 1 and 2 - total output VAT for the period.

Box 3 calculation: Box 1 + Box 2 = Box 3
Purpose: Total VAT due on all outputs (sales and EU acquisitions)
Auto-calculated: Most MTD software calculates this automatically
Verification: Check this figure matches your VAT account total for output tax

Box 3 is a simple sum. If this figure seems unexpectedly high or low, review boxes 1 and 2 for errors before submitting.

Box 4: VAT reclaimed on purchases and other inputs

This is the total VAT you can reclaim on your business purchases. You can only reclaim VAT if you have a valid VAT invoice.

Box 4 - VAT reclaimed on purchases and other inputs

What to include in box 4 of the VAT return - input VAT you can reclaim.

Box 4 purpose: VAT reclaimed on purchases and other inputs for the period
Include - Business purchases: VAT on goods and services bought for business use (with valid VAT invoice)
Include - Reverse charge VAT: VAT you accounted for in box 1 on services from abroad (self-assessed)
Include - EU acquisition VAT: VAT you accounted for in box 2 on goods from EU (if you can reclaim it)
Include - Bad debt relief: VAT on invoices written off as bad debts (after 6 months and certain conditions)
Include - Corrections: Net increase in VAT reclaimable from errors on previous returns
Exclude - Blocked input tax: VAT on business entertainment, non-business use, certain cars
Exclude - Invoices without valid VAT number: Cannot reclaim VAT without a proper VAT invoice from a registered supplier

Requirements for reclaiming input tax

Must have a valid VAT invoice
Goods or services must be used for business purposes
You must be VAT-registered
The supply must not be blocked (e.g., business entertainment)

Important: Some input VAT cannot be reclaimed, even with a valid invoice. Check the list of blocked items before including VAT in box 4. Common blocked items include business entertainment (excluding staff) and cars unless they are used solely for business purposes.

Box 5: Net VAT to pay or reclaim

This is the bottom line of your VAT return - the difference between what you owe (box 3) and what you can reclaim (box 4).

Box 5 - Net VAT to pay or reclaim

Box 5 shows the net VAT position - either VAT to pay HMRC or VAT to reclaim.

Box 5 calculation: Box 3 minus Box 4 = Box 5
Positive figure: VAT to pay to HMRC
Negative figure: VAT to reclaim from HMRC (refund due)
Payment deadline: 1 calendar month and 7 days after the end of the VAT period (electronic payment)
Refund processing: HMRC typically processes refunds within 10 working days if return is straightforward

Understanding your VAT position

Most businesses pay VAT because they charge more VAT on sales than they pay on purchases. Businesses that regularly receive refunds include exporters (zero-rated sales) and businesses making significant capital purchases.

HMRC may query returns showing consistent refunds or unusually large claims.

A positive figure means you owe VAT to HMRC - pay by the deadline to avoid penalties. A negative figure means HMRC owes you a refund - this will usually be paid within 10 working days if your return is straightforward.

Values excluding VAT (boxes 6-9)

These boxes record the net values of your sales and purchases - the amounts before VAT is added. All figures should be rounded down to whole pounds.

Box 6: Total value of sales excluding VAT

Include the net value of all your sales and outputs, regardless of whether VAT was charged.

Box 6 - Total value of sales excluding VAT

What to include in box 6 of the VAT return - total sales and outputs excluding VAT.

Box 6 purpose: Total value of sales and all other outputs, excluding VAT
Include - Standard-rated sales: Net value (before VAT) of all 20% rated sales
Include - Reduced-rated sales: Net value of all 5% rated sales
Include - Zero-rated sales: Full value of zero-rated supplies (exports, food, books, etc.)
Include - Exempt supplies: Value of exempt supplies (insurance, education, health, etc.)
Include - Supplies outside scope: Value of out-of-scope supplies (wages, dividends, statutory fees)
Exclude - VAT amount: All figures are net of VAT
Round to whole pounds: Round down to nearest whole pound

Key points for box 6

This is your total business turnover for VAT purposes
Include all supplies even if no VAT was charged
Used by HMRC to check VAT registration threshold compliance
Should broadly match your accounting records for sales

This figure represents your total business turnover for VAT purposes. It should broadly match your accounts - if there is a significant difference, check your records.

Box 7: Total value of purchases excluding VAT

Include the net value of all your business purchases and inputs.

Box 7 - Total value of purchases excluding VAT

What to include in box 7 of the VAT return - total purchases and inputs excluding VAT.

Box 7 purpose: Total value of purchases and all other inputs, excluding VAT
Include - Business purchases: Net value of all goods and services purchased for business
Include - Purchases with no VAT: Purchases from non-VAT registered suppliers
Include - Exempt purchases: Value of exempt supplies received (e.g., insurance premiums)
Include - Capital goods: Value of capital equipment, vehicles, property purchases
Include - Imports: Value of goods imported from outside the UK
Exclude - VAT amount: All figures are net of VAT
Exclude - Wages and salaries: Staff costs are outside the scope of VAT
Round to whole pounds: Round down to nearest whole pound

Key points for box 7

This is your total business expenditure for VAT purposes (excluding wages)
Include purchases even where you cannot reclaim the VAT
A large difference between box 4 and box 7 may indicate blocked input tax or exempt/zero-rated purchases

Note that wages and salaries are not included in box 7 - they are outside the scope of VAT.

Box 8: Total value of supplies to EU member states

This box is mainly relevant for Northern Ireland businesses supplying goods to the EU.

Box 8 - Total value of supplies to EU member states

What to include in box 8 of the VAT return - EU supplies (now mainly Northern Ireland only).

Box 8 purpose: Total value of supplies of goods to EU member states
Post-Brexit (Great Britain): Generally zero - EU sales are now exports, reported in box 6 only
Northern Ireland businesses: Include value of goods dispatched to EU under the Windsor Framework
Exclude - Services: Services to EU are not included in box 8
Also include in box 6: All box 8 figures must also be included in box 6

Post-Brexit changes

Since 1 January 2021, box 8 is mainly relevant for Northern Ireland businesses supplying goods to EU member states under the Windsor Framework. For Great Britain businesses, sales to EU customers are now exports and should be included in box 6 as zero-rated supplies.

Box 9: Total value of acquisitions from EU member states

This box is mainly relevant for Northern Ireland businesses acquiring goods from the EU.

Box 9 - Total value of acquisitions from EU member states

What to include in box 9 of the VAT return - EU acquisitions (now mainly Northern Ireland only).

Box 9 purpose: Total value of acquisitions of goods from EU member states
Post-Brexit (Great Britain): Generally zero - EU goods are now imports, handled via customs procedures
Northern Ireland businesses: Include value of goods received from EU under the Windsor Framework
Exclude - Services: Services from EU are not included in box 9
Also include in box 7: All box 9 figures must also be included in box 7

Post-Brexit changes

Since 1 January 2021, box 9 is mainly relevant for Northern Ireland businesses acquiring goods from EU member states under the Windsor Framework. For Great Britain businesses, purchases from EU suppliers are now imports and should be included in box 7 only.

Rounding your figures

Correct rounding helps avoid minor discrepancies between your return and your records.

VAT return rounding rules

How to round figures on your VAT return correctly.

Boxes 1-5 (VAT amounts): Round to the nearest penny or report in whole pounds
Boxes 6-9 (values): Round down to the nearest whole pound
MTD software: Most MTD software handles rounding automatically
Rounding adjustment: Small rounding differences (under £1) are acceptable and need not be corrected
Consistent method: Use the same rounding method consistently each period

Rounding errors should be minor. If your return shows unexpectedly large differences after rounding, review the underlying figures. HMRC accepts reasonable rounding provided it is consistent and does not materially affect the VAT due.

Common mistakes to avoid

These errors frequently cause problems with VAT returns. Taking time to check these points can save you from penalties and HMRC queries.

Common VAT return errors to avoid

Frequent mistakes businesses make when completing VAT returns and how to avoid them.

Including VAT in boxes 6-9: Error: Including VAT-inclusive figures. Correct: All values must exclude VAT
Claiming blocked input tax: Error: Reclaiming VAT on business entertainment or private use. Correct: Exclude blocked items from box 4
Missing invoices: Error: Claiming input tax without valid VAT invoice. Correct: Only reclaim with proper documentation
Wrong tax point: Error: Including sales in wrong period. Correct: Use invoice date or delivery date as appropriate
Omitting zero-rated sales: Error: Not including exports in box 6. Correct: Include all sales regardless of VAT rate
Double-counting EU boxes: Error: Forgetting to include box 8/9 figures in boxes 6/7. Correct: EU figures appear in both
Reverse charge errors: Error: Not accounting for reverse charge on overseas services. Correct: Include in both box 1 and box 4
Cash accounting mismatch: Error: Mixing cash and invoice accounting. Correct: Use one method consistently

Correcting errors

Errors up to £10,000 (or 1% of turnover if greater, up to £50,000) can be corrected on your next VAT return. Larger errors must be disclosed to HMRC separately using form VAT652.

Deliberate errors or repeated mistakes may result in penalties.

How to fill in and submit your VAT Return (VAT Notice 700/12)

Submission deadlines

Missing your VAT deadline results in penalty points and can lead to financial penalties. Know your deadlines and submit with time to spare.

VAT return and payment deadlines

VAT return submission and payment deadlines for quarterly, monthly, and annual accounting schemes.

Standard quarterly deadline: 1 calendar month and 7 days after the end of the VAT accounting period
Electronic payment deadline: Same as return deadline (1 month and 7 days) if paying electronically
Non-electronic payment deadline: 1 calendar month after the end of the VAT accounting period (7 days earlier than electronic)
Monthly returns deadline: 1 calendar month and 7 days after the end of each monthly period
First return after registration: Covers period from effective date of registration to end of first VAT quarter; deadline is 1 month and 7 days after that quarter ends

Making Tax Digital

Since April 2022, all VAT-registered businesses must keep digital records and submit returns using MTD-compatible software. Paper returns are no longer accepted except in specific exemption cases.

Annual Accounting Scheme - interim payments: 9 monthly or 3 quarterly interim payments based on previous year's VAT liability
Annual Accounting Scheme - return deadline: 2 months after the end of the annual accounting period
Annual Accounting Scheme - balancing payment: Due with the annual return, 2 months after period end
Annual Accounting Scheme - eligibility: Estimated VAT-taxable turnover of £1.35 million or less in the next 12 months

Non-standard VAT periods

HMRC may assign different accounting periods (monthly or non-standard quarters) based on business circumstances. Monthly returns are typically required for businesses regularly claiming VAT refunds or those HMRC wishes to monitor more closely.

Businesses can request monthly returns if they regularly reclaim more VAT than they pay (e.g., exporters).

Late submission penalty (first offence): Warning letter (no financial penalty for first late return in 12 months)
Late submission penalty (repeated): Points-based system - financial penalty when threshold reached
Late payment interest: Interest charged from day after payment due date at Bank of England base rate plus 2.5%
Record keeping: VAT records must be kept for 6 years

Submit your VAT Return

How to submit using MTD software

All VAT-registered businesses must keep digital records and submit returns using Making Tax Digital (MTD) compatible software. Paper returns are no longer accepted except in specific exemption cases.

Submitting your return

Ensure your records are complete: Enter all sales and purchase invoices for the period into your software
Review the VAT summary: Most software shows you the 9-box figures before submission. Check these against your expectations
Check for anomalies: Large swings from previous periods, negative box 5 when you normally pay, or unusually high box 4 should all be investigated
Submit through your software: Your software connects directly to HMRC. You will receive a confirmation number when submitted successfully
Keep a copy: Save or print a copy of the submitted return for your records

Common MTD software options

HMRC maintains a list of compatible software on GOV.UK. Popular options include:

Full accounting packages: Xero, QuickBooks, FreeAgent, Sage - these manage your entire bookkeeping and VAT submission
Bridging software: Links your existing spreadsheets to HMRC's systems if you prefer to keep your current records
Free options: Some free MTD-compatible software is available for simple businesses

Your accountant may also submit returns on your behalf using their own software.

Penalties for late submission and payment

HMRC operates separate penalty systems for late submission and late payment. Understanding these helps you avoid unnecessary costs.

VAT late submission penalties

Points-based penalty system for late VAT returns, including point thresholds by filing frequency and penalty amounts.

From 1 January 2023, HMRC uses a points-based penalty system for late VAT returns. Each late submission adds a penalty point to your account. When you reach the threshold for your filing frequency, you receive a £200 penalty and continue to receive £200 for each subsequent late submission until points are reset.

Penalty amount (at threshold): £200 per late submission
Points threshold (annual returns): 2 points
Points threshold (quarterly returns): 4 points
Points threshold (monthly returns): 5 points
Points expiry period: 24 months of timely submissions after reaching threshold
Effective date: VAT periods starting on or after 1 January 2023

How points accumulate

You receive one penalty point for each VAT return submitted late. Points accumulate separately from financial penalties:

Below threshold: No financial penalty, but points remain on your record
At threshold: £200 penalty for the late return that triggered the threshold
Above threshold: £200 for every subsequent late return until points reset

Resetting points to zero

To reset your points after reaching the threshold, you must:

Submit all outstanding returns
Submit all returns on time for a 24-month period of compliance

If you have not reached the threshold, points expire 24 months after they were incurred (provided you have no further late submissions).

Penalty points and penalties if you submit your VAT return late

VAT late payment penalties

Penalty structure for late VAT payments, including first and second penalty charges and daily interest rates.

From 1 January 2023, late payment of VAT incurs two separate penalties plus interest. The system operates differently to the points-based late submission regime.

First 15 days late: No penalty (but interest accrues from day 1)
16 to 30 days late: 2% of VAT outstanding at day 15
Over 30 days late (first penalty): 2% of VAT outstanding at day 15 PLUS 2% of VAT outstanding at day 30
Over 30 days late (second penalty): 4% per year (calculated daily on outstanding balance)
Late payment interest rate: Bank of England base rate plus 2.5% (calculated daily from due date)
Effective date: VAT periods starting on or after 1 January 2023

Understanding the two penalty structure

First penalty: A fixed charge based on percentage of outstanding VAT:

Paid within 15 days: No penalty
Paid between 16-30 days: 2% of what you owed at day 15
Paid after 30 days: 2% (day 15) + 2% (day 30) = 4% of outstanding VAT

Second penalty: An ongoing daily charge (annualised at 4%) that accrues from day 31 until you pay in full. This is in addition to the first penalty.

Late payment interest

Interest is charged from day 1 after the due date at the Bank of England base rate plus 2.5%. This is separate from penalties and applies to all late payments.

Interest calculation basis: Daily simple interest (not compounded)
Interest start date: Day after the payment due date
Current interest rate (January 2026): Check HMRC website for current Bank of England base rate plus 2.5%

Penalty points and penalties if you submit your VAT return late

Correcting errors on previous returns

If you discover an error after submitting a VAT return, you have two options depending on the size of the error.

Small errors (up to £10,000 or 1% of turnover)

You can correct errors up to £10,000 (or 1% of your box 6 turnover if that is greater, up to a maximum of £50,000) on your next VAT return. Simply adjust the relevant boxes to include the correction.

Large errors (over the threshold)

Errors exceeding the threshold must be disclosed separately to HMRC using the online error correction service, or by writing to HMRC's VAT Error Correction team. Include:

The VAT period affected
How the error happened
The amount involved
Whether the error was in your favour or HMRC's

Disclosing errors promptly and voluntarily typically results in lower penalties than if HMRC discovers the error themselves.

1

Gather your records for the VAT period

Collect all sales invoices, purchase invoices, and bank statements for the return period. Check that all transactions are recorded in your accounting system.
2

Review your VAT account summary

Run a VAT summary report from your software. Check that output tax (box 1) and input tax (box 4) figures match your expectations.
3

Check for common errors

Verify that boxes 6-9 exclude VAT, that you have not claimed blocked input tax, and that all sales are in the correct period based on tax points.
4

Submit via MTD software before the deadline

Submit your return with enough time to spare. The deadline is 1 calendar month and 7 days after the end of your VAT period.
5

Pay any VAT owed by the deadline

If box 5 shows VAT to pay, arrange payment before the deadline. Allow time for the payment to reach HMRC's account.
6

Keep a copy of your submitted return

Save a PDF or printout of the submitted return with your VAT records. You must keep VAT records for 6 years.

Submit your VAT Return

Legal basis

This guidance is based on the following UK legislation.

Primary legislation

Finance Act 2021 (Plastic Packaging Tax)

Act 2021

UK-wide
Value Added Tax Act 1994

Act 1994

UK-wide

Secondary legislation

Value Added Tax Regulations 1995

SI 1995

UK-wide

Related guides in Tax & Finance

Before you start

Understanding the 9-box VAT return

VAT amounts (boxes 1-5)

Box 1: VAT due on sales and other outputs

Box 2: VAT due on acquisitions from EU member states

Box 3: Total VAT due

Box 4: VAT reclaimed on purchases and other inputs

Box 5: Net VAT to pay or reclaim

Values excluding VAT (boxes 6-9)

Box 6: Total value of sales excluding VAT

Box 7: Total value of purchases excluding VAT

Box 8: Total value of supplies to EU member states

Box 9: Total value of acquisitions from EU member states

Rounding your figures

Common mistakes to avoid

Submission deadlines

How to submit using MTD software

Submitting your return

Common MTD software options

Penalties for late submission and payment

Correcting errors on previous returns

Small errors (up to £10,000 or 1% of turnover)

Large errors (over the threshold)

Gather your records for the VAT period

Review your VAT account summary

Check for common errors

Submit via MTD software before the deadline

Pay any VAT owed by the deadline

Keep a copy of your submitted return