VAT is a tax that you may commonly see throughout the UK without even considering. Consumption tax like this is often printed on receipts and can be a regular part of any retail shopping experience.
VAT is otherwise known as value added tax at the consumption tax that's placed on any product or value gets added into the supply chain. The total amount of VAT that's applied to a cost of a product really has to do with the cost of materials used in the product and the amount of tax that has already been applied throughout the chain of the products production. This tax was originally introduced in the year 1973 and it's become the third-largest source of government revenue from taxation.
If you run a business it's very important that you know about value added tax. Is any business has an annual threshold of over £85,000 they must register for VAT as well as complete a VAT return quarterly. When a business is registered for VAT they must continue to charge VAT on the goods and services that they sell. The current VAT rate sits at 20% for goods and services.
Consumers have to VAT on the goods and services that they buy from other businesses as well. The overall idea of VAT taxes that the VAT you are charging in the VAT that's collected, should eventually balance out for your company. After registering for the VAT tax return quarterly you will receive an amount from the HMRC based off of the extra amount that they owe you or a bill for the extra amount of VAT that you could owe to the government.
Including VAT on your invoices and listing the cost of goods and services before VAT is very important for any business. If you feel as though your turnover could go over £85,000 each year, you need to be certain that you are charging VAT on your goods and services as a business. This applies even if you are a self-employed professional running your own business.
If you would like more information on VAT and how you can work to balance VAT with the HMRC, contact our tax professionals today. We can advise you on the best time to register for VAT as well as some of the top ways that you can improve the balance to prevent refunds with VAT. As a group of knowledgeable tax experts, we have helped many companies with VAT solutions and savings. If you need information on VAT and how it relates to your company, contact us today to learn more.
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