A recent Sage Survey indicated 56% of businesses are concerned about getting VAT wrong. So, in this article we aim to try and help you get your facts straight surrounding VAT. Starting with the basics...
What is VAT?
The HMRC describe VAT as a tax that's charged on most goods and services that VAT-registered businesses provide in the UK.
VAT is charged when a VAT-registered business sells to either another business or to a non-business customer (or consumer).
When VAT-registered businesses buy goods or services they can generally reclaim the VAT they've paid.
What are the Rates of VAT?
There are three rates of VAT, depending on the goods or services the business provides. The rates are:
• standard - 20 per cent
• reduced - 5 per cent
• zero - 0 per cent
There are also some goods and services that are:
• exempt from VAT
• outside the UK VAT system altogether
The Sage Guide to VAT
To help small businesses better understand VAT Sage have produced a free guide - Download your free Sage Guide to VAT here>>>