Value Added Tax (VAT) can be a significant paperwork burden for your business. VAT may also add to your costs, particularly if you cannot reclaim the VAT you pay on goods and services you purchase.
Effective VAT planning aims to ensure that VAT is relatively painless, and that you are reclaiming as much as possible of the VAT you pay.
You'll find useful VAT calculators and tools in this section to help, including official advice from HMRC – but to get detailed advice on VAT-planning opportunities, talk to Accountancy Summit Ltd.
How VAT Works
How VAT works
VAT-registered businesses charge VAT on sales of most goods and services. VAT is generally charged at standard rate (20%), though there is also a reduced rate (5%) and a zero rate that apply to some goods and services.
If you are VAT-registered, you must charge VAT at the appropriate rate on your sales. Whether you are VAT-registered or not, you’ll be paying VAT on goods and services you buy from VAT-registered businesses.
VAT-registered businesses must pay the VAT they have charged to HM Revenue & Customs (HMRC). In effect, you are collecting VAT on their behalf. But provided you are not selling VAT-exempt goods or services, you can offset any VAT you have paid on your purchases against this.
Businesses that are not VAT-registered cannot reclaim any VAT they have paid.