VAT Flashcards
Rates for VAT?
20%: Most goods and services
5%: Children’s car seats and home energy
0%: Most food and children’s clothing
What is input VAT?
Added to the price on purchases of goods and services
What is output VAT?
Calculated and charged on sale of goods and services
For example, during a VAT period, Shop X (which is VAT-registered) purchases goods worth £62,000 excluding VAT with a 20% VAT rate
What is the input VAT?
Input: £12,400
During the same period, the business sells good worth £150,000, excluding VAT with a 20% VAT rate
What is the output VAT?
Output: £30,000
When is a VAT invoice issued?
Must be issued within 30 days of the relevant tax point
What does a VAT invoice include?
VAT registration number
The tax point
The total VAT exclusive amount
The amount of VAT payable
If the total input VAT paid by a business is greater than the output VAT?
Reclaim the difference from HMRC as a VAT refund
What’s included in a VAT return?
Total sales and purchases
Amount of VAT I owe and can reclaim from HMRC
When to do a VAT return?
Send a VAT Return to HMRC every 3 months
What is a VAT return?
Tell HMRC how much VAT I’ve been charged and how much I’ve paid to other businesses
