Chapter 29 VAT

Question 1

What is the principle of VAT

Answer 1

VAT means that tax should be charged at each stage of the production an distribution process but that the final tax due should be borne by the final consumer of the product Achieved as follows:

1. Traders who are registered for VAT are required to charge VAT on their sales and must account for this output tax to HMRC, but
2. such traders are allowed to recover from HMRC the input tax which they pay to their own suppliers
3. in effect, registered traders suffer no VAT and the total VAT is borne by the consumer at the end f the distribution chain

Question 2

When is UK VAT chargeable?

Answer 2

When a taxable supply of goods or services is made in the UK by a taxable person in the course of business

Question 3

When does a supply of goods occur?

Answer 3

When the ownership of goods passes from one person to another - must be made for a consideration (money/payment in kind)