how to calculate vat returns

How To Calculate VAT Returns - Guide for Small Businesses

Welcome to the world of VAT, where numbers and calculations play a crucial role! Whether you run a small or large business, it's important to understand the significance of VAT and how to calculate VAT returns accurately. VAT Returns can be calculated by using the following formula:

VAT Return = VAT on Sales - VAT on Purchases

We are here to guide you through the process and calculate vat returns by using the above formula. Let’s first understand the required information that is necessary for calculating vat returns. Before going into detail discussion of VAT Returns, if you're worrying about how to calculate VAT in Ireland user our Ireland VAT calculator and to calculate vat in UK use UK VAT Calculator.

Required Information For Calculating VAT Return

Before you get into calculating your VAT returns, make sure you have access to the following information

  • List of sold items services

    List of goods/services sold during the VAT period: Usually used to calculate VAT, this is a list of all goods or services that a business sold within a given time period.

  • Invoices and receipts

    Official sales records that verify the sale of goods or services include invoices and receipts. They should contain details such as the sale date, the buyer's name and address, and the price charged. VAT calculation highly depends on the accuracy of this data.

  • Amount of VAT charged

    For the purpose of calculating VAT returns, the amount of VAT levied on each good or service should be noted and kept in a record.

  • Amount of VAT paid

    When a business buys things for its operations, it may have to pay VAT on those items. To calculate VAT returns, the firm needs to keep track of how much VAT it paid on those purchases.

Did you know?

VAT law in the UK is one of the most complex in the world

How To Calculate VAT Return

Now that you have gathered all the required information, you can begin with the calculation of VAT returns using a very simple method given down below.

Subtraction Of Total Vat Paid From Total Vat Charged

In this step, the total VAT paid on purchases is subtracted from the total VAT incurred on sales. The VAT that the company owes to the government is the outcome.

For instance, the VAT returns of a business would be calculated in the following way:

Total VAT charged on sales = $1,000
Total VAT paid on purchases = $9,000

VAT Returns = VAT on Sales - VAT on Purchases
VAT Returns = $1000 - $9000
VAT Returns = $100

So in this case, our VAT return is $100.

VAT Return Services: What They Can Do For You

  • Ensure compliance with complex VAT regulations.
  • Provide accurate calculations, minimizing errors.
  • Save time by handling VAT obligations.
  • Offer expertise in VAT laws and changes.
  • Help optimize VAT reclaims and avoid penalties.
  • Provide peace of mind and let you focus on your business.

Managing overpaid or underpaid VAT

If a company pays more VAT than it should, it can ask the government for a refund. But if the company pays less VAT than it owes, it needs to pay the remaining amount to the government.

See Also: 10 Surprising Facts About VAT You Need to Know!

What Are VAT Return Dates?

  1. Quarterly VAT returns: Submit within 1 month and 7 days after the end of the VAT quarter.
  2. Monthly VAT returns: Submit within 1 month and 7 days after the end of the VAT month.
  3. Online submission deadline: Generally, it is one calendar month and 7 days after the end of an accounting period.

Filing Vat Return Form

  • What is a VAT return form?

Businesses can submit the amount of VAT they owe using a form issued by the government known as a VAT return form. The form normally contains information regarding the total amount of VAT charged on sales, the total amount of VAT paid on purchases, and the total amount of VAT owed.

  • Required data for a VAT form

Businesses must enter the necessary data, such as the total VAT charged and paid, and then figure out the VAT owing in order to complete the VAT return form. The government must receive the completed form by the deadline once it has been completed. Usually, you can do this online or by mail.

Did you know?

If your annual income exceeds £85, 000, you must register for VAT.

  • VAT form deadline

There’s another thing that should be remembered - it’s the VAT deadline. Depending on the country and how frequently VAT is reported, different deadlines apply for filing VAT returns (e.g. monthly, quarterly, annually). Businesses should be aware of their deadlines and make sure to submit their VAT returns on time.
Last but not least, timely and accurate VAT return submission is crucial for a number of reasons. Timely and accurate VAT returns assist companies in avoiding fines, funding government programs, and preserving their good standing.

How To File Vat Returns - In A Nutshell

  • Maintaining accurate records.
  • Calculating output and input VAT.
  • Completing the VAT return form.
  • Submitting by the deadline.
  • Paying owed VAT or claiming a refund.

How To Calculate VAT Returns In UK

Calculate VAT by comparing purchases to sales. Use software like Xero to automate VAT tracking and calculations.

Formula: v = s x r%,

where v is VAT, s is sales price, and r is the VAT rate.


It's all done now! Now that you are knowledgeable and skilled, you may confidently handle your VAT returns. Keep in mind that the key to remaining compliant and avoiding any potential penalties is maintaining accurate records and filing on time. So go ahead and perform the calculations and submit your VAT returns in a professional manner.

Rían Doyle

I'm a VAT professional with years of experience helping businesses with compliance and reporting. My goal is to simplify VAT calculation and provide valuable insights through my engaging writing style and clear explanations of complex concepts.