Completing a VAT return
Completing a VAT return: guidance for businesses that trade worldwide
Are you trading with businesses outside the UK?
Robert Warne
29/05/2018
Completing a VAT return
Have you considered the VAT implications? Below we guide you as to which boxes on the VAT return should be completed for each type of transaction.

Note: selling services overseas

If your customer belongs in another EU state and is in business or if your customer belong outside the EU, your services will be outside the scope of UK VAT (subject to the same exceptions as described under 'Buying services from abroad [below]). The only entry required is in Box 6 [box 6]. An EC Sales List will also need to be completed in respect of services supplied to VAT registered customers belonging in other EU countries.

Buying goods from another EU country

No VAT is charged by the supplier in relation to an EU purchase of goods from outside the UK. The customer accounts for the acquisition tax in Box 2 of the return. There will also be entries in Box 4 (the amount depends on the amount you are entitled to claim), Box 7 and Box 9. Completion of Intrastat may be required depending on the amount of trade.

Buying goods from a non-EU country

VAT is paid at the point when the goods enter the UK (if they are standard rated goods) and this forms input VAT for the importer when he acquires the C 79 VAT certificate issued by HMRC. Entries should be made in Box 4 (amount depends on the amount you are entitled to claim) for input VAT and Box 7 for purchases.

Selling goods to a VAT registered business in the EU

The sale is zero rated and should be recorded in Box 6 and Box 8. EC Sales Lists will be required and possibly Intrastat may be required depending on the amount of trade.

Selling goods for export destinations outside the EU

The sale is zero rated provided certain conditions are met and is recorded in Box 6.

Buying services from abroad

The reverse charge applies to the majority of services brought from both EU and non EU suppliers. The exceptions to this are land related services, admission to events and long-term hire of goods. If you receive an overseas invoice for a service with no VAT then you will have to account for VAT on the reverse charge basis. The basic principle of the reverse charge is that the customer deals with the VAT rather than the supplier. The customer treats the services as both his income and expenditure. Entries will be made as follows:
Box 1 (Output tax) Value of the supplies multiplied by the rate of VAT that applies to that service in the UK
Box 4 (Input tax) The same figure as Box 1 but adjusted for any partial exemption requirements
Box 6 (Sales) The net figure should be entered – invoice value
Box 7 (Purchases) The net figure should be entered – invoice value

VAT return guide

Box UK Trade EU purchase goods EU sales goods EU purchase services [note 5] EU sales services [note 5]
1. Output tax Yes No No Yes under reverse charge No
2. Acquisition tax (goods) No Yes under acquisitions procedure No No No
3. Sum of Box 1 and 2 Formula Formula Formula Formula Formula
4. Input tax [note 8] Yes Yes No Yes No
5. Net due from/to MRC Formula Formula Formula Formula Formula
6. Sales net of VAT Yes [note 1] No Yes Yes Yes
7. Purchases net of VAT Yes [note 2] Yes No Yes No
8. EU sales (goods) No No Yes No No
9. EU purchases (goods) No Yes No No No
EU Sales list No No Yes No Yes
Intrastat No Yes [note 3] Yes [note 4] No No
 
Box Non EU purchase goods Non EU sales goods Non EU purchase Services [note 6] Non EU sales Services [note 6]
1. Output tax No No Yes under reverse charge No
2. Acquisition tax (goods) No No No No
3. Sum of Box 1 and 2 Formula Formula Formula Formula
4. Input tax Yes [note 7] No Yes No
5. Net due from/to MRC Formula Formula Formula Formula
6. Sales net of VAT No Yes Yes Yes
7. Purchases net of VAT Yes No Yes No
8. Non-EU sales (goods) No No No No
9. Non-EU purchases (goods) No No No No
No No No No
No No No No

Note 1: Include: exempt supplies and zero rated supplies. Exclude: Insurance claims, loans etc.

Note 2: Exclude wages and salaries, o/s scope VAT items e.g. rates, vehicle licences

Note 3: If annual arrival greater than threshold

Note 4: If annual despatches greater than threshold

Note 5: Except land related and admissions to events. For supplies of services the customer must be in business

Note 6: Except land related and admissions to events

Note 7: Based on C 79

Note 8: Subject to the normal rules for deducting input tax