Registering For VAT

VAT stands for Value Added Tax. VAT is a tax which is charged on the sale of goods and services and is levied on the final consumer.

Value added tax is generally charged on the supply or items in the UK but can also affect items imported from within and outside the EU.

The phrase Taxable supplies relates to all products and services where VAT is levied. If a company make a taxable supply they must add VAT at a rate of 17.5% to the invoice amount. This practice will be effective from the first date the company becomes registered.

The following transactions will be know as the "sale" of goods and services to which VAT must be charged.

• Sales of brand new or secondhand products 
• Rental and loan of goods services 
• Transferring goods for private use. 
• Provision of services 
• Entrance fees

A consequence of being  registered is that you must levy VAT on the products and services sold in the United Kingdom.

There are some items on which are VAT does not have to be charged. These items fall in to two categories: Zero rated supplies and exempt supplies. For the purposes of VAT rates, there are effectively 3 rates at which VAT could be charged in the UK: 

• The standard rate which is 17.5%
• The rate used for utilities which is currently 5% 
• The zero rate which although the items fall within the scope of VAT, the actual amount charged is zero.

There are rules which govern VAT and who must and can register:

The company's sales of items which fall in to the scope of VAT reaches or is set to reach the VAT registration border.
An individual or company purchases another entity
Your company buys items from other non UK EU countries.