What is calculated in Box 3 of the VAT return?

Box 3 of the VAT return represents the total amount of VAT due to HMRC for the accounting period. It is calculated by adding the values from Box 1, which contains the output tax collected on your sales, and Box 2, which records the VAT due on acquisitions from other EU member states. This combined figure in Box 3 allows businesses to determine the total VAT they need to pay to the tax authorities.

Understanding this calculation is crucial because it aids in accurate reporting and ensures compliance with VAT regulations. Knowing how Box 3 is derived helps businesses keep track of their tax obligations and accurately remit the correct amount to HMRC, ultimately avoiding penalties or interest due to misreported figures.