How VAT Boxes Are Determined
Sales Documents
Sales documents always post VAT to:
- Box 1 – VAT on sales
- Box 3 – Total VAT due
- Box 6 – Total sales
These boxes are fixed and cannot be changed.
Purchase Documents
Purchase documents post VAT to:
- Box 4 – VAT reclaimed on purchases
- Box 7 – Total purchases
However, Box 5 (Net VAT due or reclaimable) is also affected when a standard VAT code is applied, because Box 5 is a calculated figure:
Box 5 = Box 3 - Box 4
So while Purchase documents do not directly post to Box 5, they influence it whenever VAT is reclaimed.
Reduced‑rate or zero‑rate codes will behave similarly, affecting Boxes 4 and 7 depending on the VAT rate applied.
What can I do if I need VAT to post differently?
There are currently two supported options:
1. Manual Journal Adjustment
Before submitting the VAT return:
- Total the VAT amounts that need reallocating
- Post a manual journal to move VAT between the relevant VAT control accounts
This ensures the VAT return reflects the correct values.
2. Post as a Purchase Document and Settle via Contras
If a transaction needs to behave like a purchase for VAT purposes:
- Post it as a Purchase document
- Settle it using Contras (receipts/payments posted to a dedicated contra control account)
This allows the VAT to flow through the correct boxes while still clearing the balance