super_si

Business dont pay VAT on parts?!?

Just im doing an assignment and someone mentioned it

Si

mark_h

I think they do pay it but they can later reclaim it.

Maddriver

If a business buys VATable parts from a VAT registered supplier then they do pay the VAT on it.

However, if the business is VAT registered then they can claim it back (actually deduct it from the VAT on sales that they have to pay to Customs and Excise). Its therefore common to ignore the VAT element, in the knowledge that you can get it back.

E.g. If I told my boss I wanted to buy something for £100 +VAT he'd focus on the £100, as the cost to the company, the extra £17.50 comes back at the end of the quarter.

HTH - I'll go into more detail if you need it (or if I haven't made sense above)

super_si

Just asked a mate, said he can claim it after £52,000 profit

Cheers

Si

just adding say you had 12*100+ vat items.

you just focus on the £1200 as you'd get the VAT back

Si

[Edited by super_si - 11/30/2002 10:45:46 AM]

MattN

has nothing to do with profits.

Any company can become VAT registered, companies with a turnover over £52000 in any 12 month period have to become registered, companies <52k don't have too.

You basically claim back the VAT you pay. And pass over the VAT you claim. So you simply take the VAT you have claimed deduct the VAT you have paid and that is what you owe the IR.

The easiest way to remember it is you can only pay VAT on something once I.e. the end user pays it all, and the people before claim back there bit.