How does Xero populate the standard VAT Return?

Xero populates the lines on the VAT Return according to your organisation's VAT scheme, and the tax rates you apply to transactions. To view the transactions making up each total on the VAT Return, go to the VAT Audit Report.

If you use a flat rate VAT reporting scheme, see How does Xero populate the Flat Rate VAT Return? For general information about how Xero accounts for VAT, see How does the VAT Return work?

Important information about the standard VAT Return

Transactions using the 'No VAT' tax rate are excluded from the VAT Return

Transaction amounts set to 'No VAT' won't be included in the VAT Return. Transactions that are 'No Tax' overall, and transactions that have line items set to 'No VAT', will still be listed on the VAT Audit report in the 'No VAT' section. You can use this as a useful reference when checking that all the transactions you expect to be included in your VAT Return totals have been correctly accounted for.

  • Whole transaction - Where all line items on a transaction are set to 'No VAT' the whole transaction will be excluded from the total sales/income and purchases/expenses figures on your return.
  • Line item - If 'No VAT' is used on one of many line items in a transaction, then just that portion of the transaction will be excluded.

If you need a transaction to be reported on your return, but it doesn't have a VAT component, choose a tax rate that doesn't attract tax, for example, 'Zero Rated Income', 'Zero Rated Expenses'.

(Cash scheme) Transactions using certain tax rates are always included on the accruals basis

Transactions using following tax rates are always included in the VAT Return on the accruals basis as required by HMRC, even if you prepare your return under the cash scheme:

  • EC Acquisitions (20%)
  • EC Acquisitions (Zero Rated)
  • Your own tax rates with the tax type 'EC Acquisitions'
  • Reverse Charge Expenses (20%)
  • Your own tax rates with the tax type 'Reverse Charges'
  • Zero Rated EC Goods Income
  • Your own tax rates with the tax type 'EC Sales Goods'
  • Your own tax rates with the tax type 'EC Purchases'.

Box 1 - VAT due this period on sales and other outputs

Includes the VAT portion of all income transactions for the period and any late claims (if you've chosen to include late claims). These transactions use:

  • 20% (VAT on Income) tax rate
  • 5% (VAT on Income) tax rate
  • Your own rates with the tax type ‘Sales’
  • Any rate with the tax type 'Reverse Charges'. Note that an offsetting amount is included in box 4, giving a net amount of 0.
  • Acquisitions from the EC aren't included.
  • Transactions using the tax types 'EC Sales Goods' and 'EC Sales Services' aren't included. The total value of the EC Sales Goods transactions is reported at Box 6 and 8. The total value of the EC Sales Services transactions is reported only at Box 6.

Box 2 - VAT due in this period on acquisitions from other EC Member States

Includes the VAT portion of transactions in the period using a tax rate with the tax type of:

  • 'EC Purchases'
  • 'EC Acquisitions'. Note that an offsetting amount is included in box 4, giving a net amount of 0.

Box 4 - VAT reclaimed in this period on purchases and other inputs (including acquisitions from EC)

This includes:

  • The VAT portion of all expense transactions in the period and any late claims (if you've chosen to include late claims). These are transactions using:

    • 20% (VAT on Expenses) tax rate
    • 5% (VAT on Expenses) tax rate
    • Your own rates with the tax type 'Purchases'
    • Your own rates with the tax type 'EC Purchases'
    • Tax rates with the tax type 'EC Acquisitions'. Note that an offsetting amount is included in box 2, giving a net amount of 0.
    • Tax rates with the tax type 'Reverse Charges'. Note that an offsetting amount is included in box 1, giving a net amount of 0.
  • The entire transaction amount where the tax rate is 'VAT on Imports'.

Box 6 - Total value of sales and all other outputs excluding VAT (including supplies to EC)

Includes the VAT exclusive amounts of transactions using any of the following tax rates:

  • 20% (VAT on Income)
  • 5% (VAT on Income)
  • Zero Rated Income
  • Zero Rated EC Goods Income
  • Zero Rated EC Services
  • Exempt Income
  • Your own rates with the tax type 'Sales'
  • Your own rates with the tax type 'EC Sales Goods'
  • Your own rates with the tax type 'EC Sales Services'
  • Your own rates with the tax type 'Exempt Sales'
  • Any rate with the tax type 'Reverse Charges'

Box 7 - Total value of purchases and all other inputs excluding VAT (including acquisitions from EC)

Includes the VAT exclusive amounts of transactions using any of the following tax rates:

  • 20% (VAT on Expenses)
  • 5% (VAT on Expenses)
  • Zero Rated Expenses
  • Zero Rated EC Expenses
  • Exempt Expenses
  • Your own rates with the tax type 'Purchases'
  • Your own rates with the tax type 'EC Purchases'
  • Your own rates with the tax type 'Exempt Purchases'
  • Any rate with the tax type 'EC Acquisitions', including zero rated transactions
  • Any rate with the tax type 'Reverse Charges'

Box 8 - Total value of all supplies of goods, excluding any VAT, to other EC Member States

Includes the sum of all EC Sales Goods transactions in the period and any late claims (if you've chosen to include late claims), excluding VAT. This amount is always reported on the accruals basis as required by HMRC, even if you prepare your VAT Return under the cash scheme. Transactions using the following tax rates are included:

  • Zero Rated EC Goods Income
  • Your own rates with the tax type 'EC Sales Goods'

Box 9 - Total value of all acquisitions of goods, excluding any VAT, from EC Member States

Includes the sum of all EC Purchase transactions in the period and any late claims (if you've chosen to include late claims), excluding VAT. Transactions using the following tax rates are included:

  • Zero Rated EC Expenses
  • Your own rates with the tax type 'EC Purchases'
  • Any rate with the tax type 'EC Acquisitions', including zero rated transactions