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VAT is a tax on the supply of goods and services made by a taxable person in the course of a running a business. For VAT purposes supplies are divided into both taxable supplies and exempt supplies. Within the realm of taxable supplies there are actually three categories of supply – standard rated, zero rated and reduced rate. The distinction between the different types of taxable supply and an exempt supply is crucial from a VAT point of view, but is often misunderstood.
An added complication is introduced where supplies of goods or services may perhaps be made up of two or more separately identifiable elements, which may in actual fact each attract different VAT liabilities. The treatment of these types of ‘mixed’ supply requires careful thought.
However, many clients find that one of the first challenges they face when it comes to VAT is deciding whether or not they need to or should register for VAT in the first place. This in itself is not always as easy as it sounds.
Finally, the VAT position in relation certain types of transaction needs to be properly understood. To give some examples of the types of transaction that I am referring to there; I’m thinking here of property transactions, which can require some careful thought, or for example, the VAT position when you’re buying or selling a business.
As the business grows you may be considering trading overseas or perhaps importing or exporting goods and services. This also requires careful consideration from a VAT point of view.
Whether you are trading locally or internationally, it is important to ensure that you understand your VAT position and ultimately that you correctly account for your VAT to HMRC.
ETC works with clients to help them understand whether it’s appropriate to register for VAT, what their VAT liabilities are, and to help them understand the VAT analysis of specific transactions they are undertaking as part of running their business’.