Value Added Tax (VAT): Quick Facts

ashored
10 hours ago
1 min read

Value Added Tax (VAT) is a tax on consumer expenditure that is levied on business transactions, imports and acquisitions. VAT is administered by HM Revenue & Customs (HMRC).

Here we discuss how to manage VAT and meet the associated compliance requirements.

Value Added Tax (VAT) is a tax on consumer expenditure and is charged on supplies made in the UK, imports and, in Northern Ireland, acquisitions.
Some supplies are exempt from VAT. A person making exempt supplies does not need to charge VAT, cannot reclaim VAT on expenditure and it is unlikely the business will need to register for VAT.
A taxable person must charge VAT on supplies of taxable goods and services made in the course or furtherance of a business.
Once taxable turnover reaches the registration limit, a trader must register for VAT.
A person who fails to register on time may be charged a penalty.
A group of companies may apply for group registration.
A business whose taxable turnover is below the VAT threshold may apply to register for VAT.
Traders must account to HMRC for VAT charged or chargeable on certain supplies of goods and services.
Persons registered for VAT, and making taxable supplies, may reclaim back from HMRC most VAT suffered on purchases and imports.
Traders usually account for VAT on a quarterly basis.
Registered persons must usually file their VAT returns online and pay any VAT due electronically.
Special rules apply to moving goods between Northern Ireland and the EU under the Northern Ireland Protocol.