What Is VAT
Value Added Tax (VAT) is the tax payable to HMRC on Sales of vatable Goods & Services provided less any VAT suffered on vatable purchases.
All businesses that exceed the annual VAT turnover threshold (£85,000 for 2020), must register for VAT and charge VAT on its sales. In addition, a Quarterly VAT return must be submitted to HMRC along with the VAT payable.
VAT in UK is typically charged at 20% on goods and services sole, ho.wever certain goods and services (e.g. Children’s car seats, radiators etc) can have completely different VAT rates.
Businesses (that supply vatable goods or services) can also choose to voluntarily register for VAT. There are various benefits of being registered for VAT, as they can claim VAT suffered on purchases or some businesses can be in a VAT refund position.