Completing a Value Added Tax (VAT) return form can be a daunting task. It requires not only an understanding of the business’s financial information but also knowledge of the various boxes that need to be filled out. To make sure you get it right, here is an overview of the different VAT boxes.
Understanding What Each Box Means The most important thing to understand when filing a VAT return is what each box means and how it relates to the business’s financial information. Here are some brief explanations of each box and its purpose, as well as examples of how to accurately fill them out.
Box 1 – Output Tax:
This box shows the amount of VAT that has been charged on all goods and services sold by the business during the specified period. This includes any goods or services sold to customers within and outside of the UK. For example, if your business sold £50,000 worth of goods in April 2020, then you would enter this number into Box 1.
Box 2 – Input Tax Claimed:
This box shows any VAT that has been claimed on goods or services bought by your business during the specified period. This includes any goods or services bought from suppliers within and outside of the UK. For example, if your business purchased £30,000 worth of supplies in April 2020, then you would enter this number into Box 2.
Box 3 – Total Tax Due or Refundable:
This box shows whether your business owes money (due) or is due a refund from HMRC (refundable). To calculate this amount, subtract Box 2 from Box 1; if there is a positive difference then you owe money to HMRC (due) and if there is a negative difference then HMRC owes money back to your business (refundable). For example, using our previous numbers (£50k in sales minus £30k in purchases), your total tax due would be £20k which should be entered into Box 3.
Filing a Value Added Tax return can be complicated without knowing what each box means and how they relate to one another. With this overview, you now have an understanding of what each box means and how they should be filled out correctly according to your company’s financial situation. Now you can confidently file your VAT returns with confidence!
Muzamil Hussain is a software developer and finance expert with over 5 years of experience in creating VAT calculators. He has worked on a variety of projects, from developing customized solutions for large corporations to helping small businesses automate their financial processes. He has a passion for using cutting-edge technologies to create tools that make life simpler and easier, and his VAT calculators are designed with this goal in mind.