{"id":2056,"date":"2022-01-20T05:30:22","date_gmt":"2022-01-20T05:30:22","guid":{"rendered":"https:\/\/uk.legalvision.com.au\/?p=2056"},"modified":"2025-07-02T00:42:01","modified_gmt":"2025-07-01T23:42:01","slug":"what-does-business-need-know-about-vat","status":"publish","type":"post","link":"https:\/\/legalvision.co.uk\/corporations\/what-does-business-need-know-about-vat\/","title":{"rendered":"What Does My Business Need to Know About VAT?"},"content":{"rendered":"

As you may know, VAT stands for Value Added Tax. You probably know that businesses have to pay it, and so do consumers. But that might be the limit of your understanding. Because you are a business owner, director, or part of the business\u2019s senior management, you want to ensure you understand all of your company\u2019s obligations for VAT. This article will explore in detail what your business needs to know about VAT.<\/span><\/p>\n

Overview\u00a0<\/span><\/h2>\n

VAT is a type of tax called a ‘consumption tax’. This means that the end consumer of goods or services will ultimately bear the tax cost. Nonetheless, at each point in the supply chain, businesses will have to pay for their supplier\u2019s VAT, and in turn, charge VAT to their customers or clients.\u00a0<\/span><\/p>\n

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Because businesses can deduct the VAT they have been charged by other businesses from their yearly tax obligation, effectively businesses are only paying tax on the value of the goods or services provided.\u00a0<\/span><\/p>\n<\/div>\n

Is My Business Liable for VAT?<\/span><\/h2>\n

If your business\u2019 turnover exceeds \u00a385,000, you must register with HMRC for VAT and complete a VAT return. All businesses, including eCommerce brands<\/a>, are subject to this criteria.\u00a0<\/span><\/p>\n

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Turnover refers to all the money your business receives in a tax year from the sale of goods or the supply of services that are not exempt from VAT (see below).\u00a0<\/span><\/p>\n

Therefore, if your business brings in less than \u00a385,000, you do not have to account for VAT in the course of your business operations.\u00a0<\/span><\/p>\n<\/div>\n

VAT Exemptions\u00a0<\/span><\/h3>\n

Businesses that supply certain goods or services are exempt from VAT and therefore do not register with HMRC even if their annual turnover exceeds \u00a385,000. These goods and services include:<\/span><\/p>\n