VAT stands for Value Added Tax and is a charge applied to the value of sales. The VAT rate, which is currently 20%, is established in the Finance Law. Companies must register for VAT if their taxable turnover exceeds the registration threshold and they must remain registered until their turnover falls below the low threshold.
Companies that are registered VAT Return Services in London must post VAT on all goods or services that are subject to VAT at the corresponding rate. They can also claim the cost of any VAT paid by the business in connection with the business of the business. A business that is not registered for VAT should not collect VAT from customers, and if companies are not registered for VAT, they cannot claim VAT on business expenses. Companies registered for VAT are effectively tax collectors and are responsible for calculating the net amount of VAT due on each VAT return. If the company has paid more VAT than it has collected, the company has the right to claim a refund.
All goods or services are taxed (for VAT purposes) at one of three different VAT rates:
Standard rate currently 20% (some items qualify for the reduced rate of 5% and these are still standard rated classes even though you only pay 5%, the reduced rate applies to this applies to household fuel and energy, products toilets for women, children car seats, installation of energy saving materials)
Zero-Rated which is taxed at 0% (these items include most food (but not restaurant or cafe meals or hot take out food and drinks), books (not e-books), newspapers, clothing and shoes for young children, exported products, most prescriptions dispensed to a patient by a registered pharmacist, most public transportation services)
Exempt that is not subject to VAT.
Although the zero rate and the exemption result in VAT not being paid, they are two very different rates. To calculate turnover for posting purposes, you must add the standard rate (including the reduced rate) and the zero-rate turnover figures together, not adding the exempt turnover rate.
You can register for VAT if your turnover with aaaaccounting is below the turnover threshold through voluntary registration. This could be beneficial for a business that sells all or primarily zero rated goods or services, but has a large number of standard rated purchases relative to the business. Also, some companies use voluntary registration to increase the profile of companies and let clients appear that the company has a turnover above the registration threshold, it works particularly well for companies whose clients are all VAT, this is because By issuing a VAT invoice, the customer can claim VAT on his next return.