Re: Increased tax, higher unemployment & economic difficulties
Posted: February 12th, 2021, 6:00 pm
tjh290633 wrote:odysseus2000 wrote:The clue is in the name "Value Added". It is not a sales tax. Nor is it a revenue tax.
TJH
Yes, I know its called value added, but I pay it when someone sells me something and at that point it is a direct tax on the sale price which without VAT would be 20% less.
Regards,
Although the price which you pay has 20% added to the net price, the seller has already paid VAT to his suppliers, at 20% on their net prices, and he deducts that tax paid from the amount which the consumer pays in VAT, to arrive at the amount he remits to the Government. That is why it is called "Value Added Tax", because the seller pays the tax on the value which he has added, not on the items which he bought to resell which have already incurred VAT (the Input Tax).
TJH
As I understand VAT it is only the end user who pays, VAT registered business can claim it back and indeed can be paid by the Revenue the difference between what they paid and got back as per:
https://entrepreneurhandbook.co.uk/understanding-vat/
However, VAT registered businesses (barring flat rate registered businesses making sub £2,000 non-capital purchases) can claim back the VAT that they pay on business expenses, provided they are VAT registered. They therefore only pay HMRC the difference between the amount they have collected and the amount they have paid. If they have more VAT expenditure than they receive from customers, HMRC will pay them the difference.
Regards,