Consideration is a fundamental element in a contract representing the exchange of promises or monetary value essential to legal agreements.
Default in the context of accounting refers to the failure to fulfill a contractual or other legal obligation, including settling debts, defending legal proceedings, or submitting and paying Value Added Tax (VAT) on time.
Deregistration refers to the process by which an entity ceases to be registered for Value Added Tax (VAT). This often occurs when a taxable person stops making taxable supplies, making deregistration compulsory, with a notification requirement within 30 days.
The election to waive exemption, also known as the option to tax, refers to the choice by a taxpayer to charge VAT on supplies that are otherwise exempt. This mechanism allows businesses to reclaim input VAT, which can benefit their cash flow and overall financial performance.
Exempt supplies refer to categories of goods or services that are not subject to Value Added Tax (VAT) as stipulated under the Value Added Tax Act 1994.
To convert a net amount into its equivalent gross amount. For example, an amount payable net of 17.5% value added tax would be grossed up to the amount payable including 17.5% value added tax, i.e. by multiplying the net amount by 1.175.
Input tax is the Value Added Tax (VAT) paid by a taxable person when purchasing goods or services from a VAT-registered trader. It is used to offset the output tax to determine the final VAT payable to tax authorities.
Irrecoverable Input VAT refers to the Value-Added Tax (VAT) paid on items acquired to produce exempt supplies and cannot be reclaimed or offset against output tax.
A persistent misdeclaration penalty is used in the collection of value-added tax (VAT) to address significant inaccuracies in VAT returns, coupled with a trader's prior record of errors.
A registered trader is a taxable person who has complied with the registration for value added tax (VAT) regulations. This compliance allows them to charge VAT on taxable supplies and reclaim any VAT they have paid on their purchases.
A regressive tax is a tax system where the tax rate decreases as the income of the taxpayer increases. This structure places more financial burden on lower-income earners relative to their income.
A company within a group of companies responsible for accounting for both output and input tax for value-added tax (VAT) purposes, and ensuring the quarterly VAT return for the group is submitted. All companies in the group share joint and several liability for any VAT due.
Retailer schemes offer various methods for retailers to efficiently manage and report taxable supplies, ensuring compliance with VAT regulations.
An arrangement in which the value-added tax (VAT) due on second-hand goods sold is calculated based on the trader's margin, rather than the total selling price.
The rate of value added tax (VAT) applied to all goods and services sold by taxable persons that are not exempt, zero-rated, or subject to a special rate. For the 2016-17 tax year, the standard rate was 20%. It is also the marginal tax rate for most taxpayers.
Under the value added tax (VAT) rules, the tax point is the date on which goods are removed or made available to a customer or when services are completed. It determines the tax period for which the output tax must be accounted.
A tax return is an annual statement of income and personal circumstances filed by a taxpayer to calculate and report individual tax liabilities and claim personal allowances.
A taxable supply refers to the provision of goods or services in the UK that is subject to Value Added Tax (VAT). It excludes any exempt supplies as defined by VAT legislation.
Under VAT regulations, the disposal of a business by a registered trader to another VAT-registered trader, on which VAT is not charged. However, new measures were introduced in the 2004 Budget to counter VAT-avoidance schemes utilizing the rules on TOGC. HM Revenue and Customs (HMRC) is responsible for applying these rules.
A turnover tax is a tax assessed on a good at an intermediate stage of production rather than on the finished good, commonly referred to in comparisons with Value-Added Tax (VAT).
VAT is a consumption tax levied on the sale of goods and services in the UK, added at each stage of production and distribution.
Value Added Tax (VAT) is a consumption tax levied on the value added to goods and services at each stage of production or distribution and is ultimately borne by the end consumer.
Value-Added Tax (VAT) is a consumption tax imposed at each step of the production process, calculated as the difference between the purchase cost of an asset to the taxpayer and its resale price. It is a key source of tax revenue in many European countries.
Zero-rated goods and services are taxable for value-added tax (VAT) purposes but are currently subject to a tax rate of zero. In contrast to exempt supplies, VAT attributable to zero-rated supplies is allowable for input tax credit.
