▶ How does VAT show on the Annual Return?

How does VAT show on the Annual Return?

VAT's representation on the Annual Return can vary depending on whether the accounts have been prepared using a Receipts and Payments basis or an Income and Expenditure basis.

For Councils Reporting on a Receipts and Payments Basis:

1. The amount of VAT charged to customers and the VAT refunds received from HMRC are included in 'Box 3: Total Other Receipts'.
2. The amount of VAT paid to suppliers and any VAT paid to HMRC is accounted for in 'Box 6: Total Other Payments'.

For Councils Reporting on an Income and Expenditure Basis:

1. The only VAT shown in the Annual Return will be VAT that has to be written off as irrecoverable. This usually occurs due to partial exemption.
2. The VAT charged to customers, paid to suppliers, and the VAT paid or repaid to HMRC are reflected on the balance sheet as an overall balance. This value forms a difference between your Box 7 and Box 8 on the annual return, treating HMRC like any other debtor/creditor.