Value Added Tax (VAT) is an integral component of the UK tax system, particularly for VAT-registered businesses. This tax is levied on most goods and services, necessitating collection, reporting, and payment to HMRC by business owners. Though seemingly straightforward, VAT is renowned for its complexity, posing challenges for many small business operators. This guide aims to simplify the VAT process, offering clear and user-friendly instructions for effectively managing VAT responsibilities.
When a product or service is subject to VAT, the seller must charge the customer VAT and remit it to HMRC. Sellers can also reclaim any VAT paid in delivering the product or service, such as on materials.