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VAT return box 2 - VAT on (EU) acquisitions

VAT return box 2 - VAT on (EU) acquisitions

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Hi all!

Wondering if you can help set the record straight on a EU acquisition VAT query I have.

Example: Business 'A' is UK VAT registered (and UK resident) and makes acquisitions from a VAT registered EU business 'B'. The goods would be standard rated (20.0%) in the UK, however as acquisition and meeting criteria is zero rated (0.0%) by business 'B' in accordance with EU directive.

In the above example, I believe you would:

1. Include the net value of the acquisition (zero-rated by 'B') in box 7 of the VAT return (inputs) = £100

2. Include the net value of the acquisition (zero-rated by 'B') in box 9 of the VAT return (acquisitions from EU countries) = £100

3. Include the VAT payable on the acquisitions based on the goods itself in box 2 (VAT due - but not yet paid by you - on goods that you buy from other EU countries) = £20 (as a standard rated good in the UK)

4. Include the VAT reclaimable on the acquisitions included in box 2 in box 4 of your VAT return (VAT reclaimable on inputs) = £20

Is the above treatment correct? If for arguements sake the acquisitions would have been zero-rated in the UK, would steps (3) and (4) be £0?

Can someone also explain exactly what is meant by "VAT due - but not yet paid by you - on goods that you buy from other EU countries". I'm confused by this as the VAT 'due' in netted to nil via box 2 and box 4 and 'but no yet paid by you' - if zero rated from 'B' there is nil VAT to pay (or VAT at 0.0%) - the statement makes little sense to me!

Thanks in advance for any advice!


Replies (7)

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Euan's picture
By Euan MacLennan
24th Nov 2011 10:13

What don't you understand?

Your suggested entries on the VAT return are exactly what is required (provided that you are able to reclaim all the input tax in Box 4).

"VAT due - but not yet paid by you - on goods that you buy from other EU countries" is exactly what it says.  The EU company B has not charged you any VAT on its supply of goods to you, but you are liable to pay VAT under the reverse charge rules.

Thanks (1)
By Coeus
24th Nov 2011 12:00

Thanks for your reply MacLennan - if I could ask for some further clarifications more for my understandings than the practicality of the mechanism:


As far as I understand the reverse charge ('RC') system - it only applies to services thus is not applicable in the above example relating to goods - thus no VAT is due.


What VAT is liable to pay thus on the acquisitions of goods from 'B'? How is any VAT posssibly 'due' when the EU directive allows zero-rating of supplies between members - this still does not make sense to me. Further to this, how would this be later paid as 'not yet paid by you'?


Can you also advise if the treatment for UK zero-rated goods acquired from the EU is correct?


Best regards,



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Euan's picture
By Euan MacLennan
24th Nov 2011 14:15

More answers

I agree that the reverse charge rules apply only to services, but the procedure is the same for acquisition tax on goods, except that the tax is shown in Box 2 of the VAT return.

The acquisition tax is paid by being included in the total output VAT in Box 3 of the VAT return and hence, in the balance of VAT in Box 5, which must be paid over to the Revenue.

Although the export of goods is zero-rated, the acquisition of goods exported from another EU state is subject to acquisition tax in the EU state acquiring the goods at the rate applicable to the sale of such goods within the acquiring state.  If the imported/acquired goods would be zero-rated if sold within the UK, then the acquisition tax and corresponding input tax will be nil.  See the HMRC guidance.


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By A.Sharp
27th Jun 2012 17:02


1).Enter  VAT on acquisition in Box 2 (unless it would it is a Zero supply)

2).Enter input tax in Box 4

3).Enter cost of goods in Box 7 and 9

EC sales list - N/A

Intrastat - declare cost of goods (only if annual threshold of £600,000.00 is reached)


1). and 2). cancel each other out  as this is mostly a monitoring exercise only.



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By Yvonnel_b
13th Nov 2012 12:12

 VAT registered client bought

 VAT registered client bought tyres from EC VAT registered business. The invoice is 0% vat. Should be clasiffied as;

- zero rated purchases from EC country T7

- standard rated purchases from EC country T8 ( Sage)

Even if it's T8 the 20% vat figure appears in box 2 and then box 4 and vat payable in the UK is nil. Is that correct?

Thank you

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By Dan1974
26th Sep 2017 08:19

Hi there

How do you account for purchases made while travelling in the EU, e.g. fuel for a truck driver?

So the local VAT has been charged at POS.

Do you use the reverse charge system in this circumstance?


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By Anne Robinson
26th Sep 2017 10:55

To everyone reading this forum:

Please please stop adding to threads which are several years old.
Start a new thread as people are unlikely to even look at old ones and it does annoy them which is not a good start.

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