Whenever we buy or sell something it is usually subject to Value added Tax, or VAT for short. This is a type of stealth tax as it is not taken directly out of our pay packets. This does not mean it is not recorded. You can clearly see the amount of VAT that has been paid on the till receipt that you get once you have made a purchase. It can be seen on the delivery note and menu at a restaurant. There are several facts that you should be aware of when it comes to VAT. The Accountants Chippenham based company https://chippendaleandclark.com are experts at ensuring that you pay the right amount when it comes to your finances. VAT affects business just as much as it does at a residential retail level.
- It is currently set at 20% in the UK. This is levied at every level of the production of goods or a service and also when those goods or services are purchased. It is set by the Chancellor of the Exchequer. When a society’s economy is doing well the amount of production and consumerism helps to bring in a good sum for the government.
- Not all items and services pay VAT. Some of the most celebrated is cake and biscuits. There is no VAT on cake but there is on biscuits. McVities campaigned when Her Majesty’s Revenue and Customs tried to say the Jaffa Cake was a biscuit. McVities proved that it became hard as it became stale unlike biscuits which go soft as they become stale.
- Other notable exceptions are nappies and childrens clothing.
- You should have a robust way of recording it if you provide goods and services. This has become more important since the government’s plan for making tax digital. The accountancy firm mentioned above will be able to help you out with this.