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VAT - A SUMMARY

 

INVOICE/CASH ACCOUNTING

FLAT RATE

REGISTRATION & RECORD KEEPING

INVOICE/CASH ACCOUNTING

FLAT RATE

REGISTRATION & RECORD KEEPING

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VAT - value added tax - is a tax levied on sales of goods and services. Think of it as a tax on the value you add to products and services - in other words, on the price difference between what you've paid and what you charge for a product.

You are required to register for VAT if the value of your taxable supplies exceeds a set annual figure (£85,000 from 1 April 2017). VAT-registered businesses must charge VAT on their goods or services and may reclaim any VAT they’ve paid on business-related goods or services. This must be reported to HM Revenue and Customs by making a VAT Return - usually every 3 months.

There are 3 different rates of VAT - Standard rate 20% (most goods & services), Reduced rate - eg. domestic fuel charged at 5%, & Zero rate - these items are still VAT-taxable, but the rate of VAT is 0% eg. books.

Most items are standard rate unless they specifically say otherwise. Reduced rate applies to certain items such as domestic fuel and power, installation of energy-saving materials, sanitary hygiene products and children's car seats. Zero-rate applies to certain items such as food (but not restaurant meals or takeaways), books and newspapers, children's clothing and shoes and public transport. Certain things are exempt from VAT, such as insurance, providing credit, education, fund-raising events by charities, membership subscriptions and most services provided by doctors and dentists. You can see a full list of VAT ratings of items and services here.

Charging VAT - If a transaction is a standard, reduced or zero-rated taxable supply, you must charge the correct rate of VAT, show the VAT information on your invoice, show the transaction in your VAT account and show the amount on your VAT Return.

Registered office: 61 Friar Gate, Derby, Derbyshire, DE1 1DJ

Adrian Mooy & Co is the trading name of Adrian Mooy & Co Ltd.  Registered in England No. 05770414

Registered to carry out audit work by the Association of Chartered Certified Accountants - auditregister.org.uk 8011438

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01332 202660

61 Friar Gate - Derby - DE1 1DJ

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