VAT

VAT is a tax on consumer expenditure. it is collected on business transactions, imports and acquisitions. Most business transactions involve supplies of goods and services.

VAT is payable if they are:

• Supplies made in the UK or the Isle of Man
• by a taxable person
• in the course of a business
• are not specifically exempted or zero-rated VAT Rates

There are 3 rates of VAT

• a standard rate, currently 20%
• a reduced rate, currently 5%
• a zero rate

From April 2010, if you have an annual VAT exclusive turnover of £100,000 or more you will have to do your VAT returns online and pay your VAT electronically. Also, if you register for VAT from 1 April 2010 onwards, you’ll have to file online from the start, whatever your turnover.

Doing your return online also helps reduce errors, provides automatic calculations and with an on-screen acknowledgment that it’s been received you don’t have to worry. What’s more, its available 24 hours a day, seven days a week, so you can do your return at a time that suits you.

If you’re using HMRC Online Services for the first time, you will have to register for an online account.

For more information go to http://www.businesslink.gov.uk/vat.

For further help, watch the video guide on the basics of VAT at http://www.businesslink.gov.uk/hmrctaxhelp.