Value Added Tax

Question 1

What is VAT?

Answer 1

VAT is an indirect tax on consumer spending and it is charged on most goods or services in the UK.

Question 2

What is taxable supply?

Answer 2

It is everything that is NOT exempt or outside the scope of VAT.

Question 3

What is input VAT?

Answer 3

Paid by business on the purchases of their goods.
- RECLAIMABLE by HMRC

Question 4

What is output VAT?

Answer 4

Charged by business on sales of their goods.
- PAYBLE to HMRC

Question 5

How is VAT paid

Answer 5

Input and output VAT are set off against each other and that is paid to HMRC