VAT, or Value-Added Tax, is charged on most of the goods and services traded in the UK, and some from abroad, too.
It applies to businesses whether they're trading to individual customers or other companies. If you are a VAT-registered business you can generally claim back VAT that has been paid for materials or other goods. Depending on your business, if you aren't registered, you might be missing out.
Not all goods and services are treated equally when it comes to VAT, with some having a lower rate applied and others being exempt altogether.
While some people register their business for VAT even if they don't have to, there are situations in which it's compulsory. Basically, if you're dealing in goods or services that VAT applies to, you'll need to register within 30 days if your turnover hits the "VAT threshold".If you do register for VAT, you'll need to fill in a VAT return, usually each quarter, and let HM Revenue & Customs know both the amount of VAT that you've charged on sales and the amount you've paid out on your own purchases. The VAT you pay will be the difference between these figures. If you’ve paid out more Vat than you’ve charged, you will receive a rebate.
VAT can be extremely complex so talk to us about your specific business set up.