A VAT report is a financial document that summarises a company’s VAT-related transactions over a specific accounting period. It supports the preparation of the VAT Return, helping businesses determine how much VAT they owe or can reclaim.
When a business is registered for VAT, it must charge VAT on taxable sales (known as output VAT) and can reclaim VAT paid on business purchases (input VAT).
Instead of paying or reclaiming VAT after every transaction, companies submit a VAT Return at the end of each accounting period. This report declares the total VAT due or reclaimable for that period.
The VAT report underpins this process by detailing all input and output VAT figures and calculating the overall VAT position – whether the business owes HMRC or is due a refund.
How to Complete a VAT Report
A VAT report includes nine boxes, each representing a key element of the VAT Return.
If you use accounting or invoicing software, these boxes are usually calculated automatically based on your transaction data.
Box 1: VAT due on sales and other outputs
Includes all output VAT due on taxable goods and services sold during the period. Do not include VAT on issued credit notes or zero-rated exports/supplies.
Box 2: VAT due on acquisitions from EU Member States (Northern Ireland only)
Covers VAT due on goods purchased from EU member states, including related costs like delivery, packaging, or insurance.
Since 1 January 2021, this applies only to EU–Northern Ireland acquisitions.
Box 3: Total VAT due
The sum of Boxes 1 and 2, representing the total VAT owed to HMRC — your output tax.
Box 4: VAT reclaimed on purchases and other inputs
Shows your input VAT — VAT paid on business purchases supported by valid VAT invoices. Exclude personal or entertainment-related expenses.
Box 5: Net VAT to be paid or reclaimed
This is your final VAT position. If output VAT (Box 3) exceeds input VAT (Box 4), you owe HMRC the difference. If it’s the opposite, you’re entitled to a refund.
Box 6: Total sales and outputs (excluding VAT)
Include all outputs such as zero-rated or exempt supplies, exports, and reverse charge transactions. Do not include loans, dividends, insurance claims, or personal deposits.
Box 7: Purchases and other inputs (excluding VAT)
Include imports, purchases from VAT-registered EU suppliers (Northern Ireland only), and reverse charge transactions. Exclude wages, salaries, PAYE, and National Insurance.
Box 8: Supplies of goods from Northern Ireland to EU Member States (excluding VAT)
Covers all goods supplied from Northern Ireland to EU countries, plus directly related costs such as shipping or freight. Do not include services.
Box 9: Acquisitions of goods from EU Member States to Northern Ireland (excluding VAT)
Shows the total value of goods and related costs purchased from EU suppliers (Northern Ireland only).
VAT Reports and Accounting Schemes
Certain VAT accounting schemes may change how your VAT report is prepared:
Annual Accounting VAT Scheme
Most businesses file quarterly VAT Returns (four reports per year). Under this scheme, however, businesses file just one annual VAT Return, paying or reclaiming VAT once per year.
Cash Accounting VAT Scheme
If you use this scheme, report figures are based on when payments are made or received, not when invoices are issued. This helps with cash flow management, especially for smaller businesses.
Conclusion
Completing a VAT report correctly is essential for maintaining compliance and keeping your business finances accurate. Each box on the return tells a specific part of your VAT story – from sales and purchases to how much you owe or can reclaim. While modern accounting and invoicing software can simplify much of the process, it’s still important to understand what each figure represents and how it affects your VAT position.
For added accuracy and peace of mind, consider reviewing your VAT processes regularly or seeking professional guidance – especially if you trade internationally or use special accounting schemes. The more confident you are in your VAT reporting, the better positioned your business is to stay compliant, efficient, and financially healthy.
