In the United Kingdom, Value Added Tax is administered by Her Majesty’s Revenue & Customs (HMRC).
In contrast to income and corporation tax which are direct taxes, VAT is an indirect tax on consumption and is charged and reclaimed by businesses in the transaction chain. Eventually, it will be born by private individuals and companies that cannot recover their VAT and that tends to be at the end of the transaction chain.
The current VAT system originated with the European Union and is applicable to all Member States of the EU. In theory, VAT is charged by the supplier and recovered by the customer at each stage of the commercial chain until it reaches the final consumer.
Therefore, VAT covers every single transaction regardless of whether the business is a manufacturer, wholesaler or retailer, whether it supplies goods or services.
It is only natural then that in the complexity of today’s business transactions, assistance must be given in order to ensure that Input VAT can be recovered by businesses in the transaction chain and that the accompanying administration has been carried out correctly.
With the permanent change in VAT legislation, businesses must ensure to engage the right advisors who can assist with both simple as well as complex transactions and stay on top of the administrative complexity of VAT compliance.