AAT Level 3 Tax Processes Practice Exam 2025 – Complete Preparation Guide

Box 4 of the VAT return specifically accounts for the input VAT that a business can reclaim for the current VAT period. This includes the total input VAT on purchases, but it must be adjusted for any credit notes received. The rationale behind this is that when a company returns goods to suppliers or receives a credit note, the amount of VAT originally paid may be adjusted accordingly. Therefore, by selecting the option that specifies "input VAT on purchases minus credit notes," it accurately reflects the net amount that can be reclaimed.

This approach ensures that the reported figures give a true representation of the VAT liability, allowing for accurate financial reporting and compliance with VAT regulations. Only considering total input VAT without adjustments would lead to overstated reclaim amounts, while excluding credit notes entirely would not reflect the actual VAT the business is entitled to recover, making this option the most precise representation for Box 4.