Value Added Tax

Value Added assess The Principle of tub Value added treasure is an substantiative revenue enhancement which was introduced in 1973 and which is charged on the r arrester of a wide variety of goods and services. Current legislation is to be inst entirely in the Value Added Tax 1994 ( value-added taxA 1994) as am remaindered by subsequent Finance Acts. VAT is administered by HM receipts and Customs (HMRC) The basic principle of VAT is that tax should be charged at each stage of the production and scattering process but that the broad(a) tax due should be borne by the terminal consumer of the product: (a)Traders who atomic number 18 registered for VAT are required to charge VAT on their sales and must(prenominal) account for output tax to HMRC (b)Registered traders are allowed to find from HMRC the infix tax which they pay to their own suppliers (c)In effect, registered traders suffer no VAT and the make out VAT is borne by the consumer at the end of the distribution chain. Example 1 A Ltd owns a target. It extracts colliery from this quarry and sells the stone to B Ltd for £10,000 plus VAT. B Ltd converts all the stone into paving slabs and sells these slabs to C Ltd for £18,000 plus VAT. C Ltd owns and runs a tend centre, where the slabs are sold to the general public for a total of £32,000, plus VAT. Show how VAT is charged and calm at each stage of this process.

(Assume that VAT is to be compute at 17.5% throughout) Solution Cost charge before VATInput taxSelling Price before VATOutput TaxPaid to HMRC £££££ A L td--10,0001,7501,750 B Ltd10,0001,75018,000! 3,1501,400 C Ltd18,0003,15032,0005,6002,450 Total VAT charged5,600 None of the three companies involved suffers any earn VAT. In each case, the total of input tax remunerative to suppliers and the bar due to HMRC is equal to the output tax accredited from customers. The final consumers, who are unable to reclaim the VAT which they pay, oblige the total VAT of £5,600. Taxable persons The term person hindquarters advert to an...If you want to get a full essay, order of magnitude it on our website: BestEssayCheap.com

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