In the 'self-assessment' process for VAT, who determines the VAT owed?

In the self-assessment process for VAT, the responsibility for determining the VAT owed falls on the business itself based on its recorded transactions. This means that the business is required to keep accurate and detailed records of its sales and purchases, which include the VAT charged on sales and the VAT paid on purchases. By compiling these figures, the business calculates its net VAT liability, which is the amount of VAT owed to HMRC after offsetting input VAT against output VAT.

This self-assessment approach allows businesses to actively manage their tax obligations and ensures that they have a thorough understanding of their financial position regarding VAT. It also emphasizes the importance of good record-keeping practices to ensure that the business can complete its VAT return accurately and submit it on time.

The other options suggest that VAT calculations can be determined by HMRC, external auditors, or solely by an accountant, which is not in line with the self-assessment principle. The essence of self-assessment lies in the business taking ownership of its tax obligations, keeping in mind that while an accountant or auditor can assist in reviewing and ensuring compliance, the ultimate responsibility for the accuracy of the VAT returns rests with the business itself.