VAT is due from taxable persons providing taxable goods and/or services.
A taxable person is a sole trader, partnership or company that is registered for VAT in the UK.
A trade has to be registered if it has turnover exceeding a set limit. Although the limit is set for each financial year, this check has to be done monthly for the 12 preceding months.
All goods and services are taxable at standard rate (15% from 1st December 2008 to 31st December 2009, otherwise 17.5%) unless they are specifically exempt or charged at a different rate.
The exemptions include insurance, training, credit, fund raising and subscriptions to organisations.
Zero rated supplies include children's clothes, food, public transport, Royal Mail post and new houses.
Reduced rate (5%) applies to domestic fuel and building conversions.
There are specific invoicing requirements for VAT registered businesses, the most important of which are the date, VAT registration number of the business and the net, VAT and gross amounts of the invoice.
VAT charged is reduced by the VAT paid by the business for supplies it receives.
The balance is paid over the the government with a regular VAT return either quarterly or monthly.
The VAT return must be submitted under the Making Tax Digital rules, which require the return to be calculated by computer directly from the invoice data of the business.
If you are unsure about how to use Making Tax Digital for VAT please contact Johnson Tax for more advice.
For more information contact Will Johnson on 07967 522374.
