ABSTRACT

Value Added Tax (VAT) is a tax on the consumption of goods and services. The UK introduced a domestic VAT regime when it joined the European Community in 1973. When a taxpayer makes taxable supplies he must account for VAT, known as output VAT at the appropriate rate of 20", 5" or 0". Any VAT due then has to be declared and submitted on a VAT submission to HM Revenue & Customs and will normally be charged to the taxpayer's customers. Where a supply relates partly to business use and partly to non-business use then the basic rule is that it must be apportioned on a fair and reasonable basis so that only the business element is potentially recoverable. A taxable person is an individual, firm, company etc. who is required to be registered for VAT. A person who makes taxable supplies above certain turnover limits is compulsory required to be VAT registered.