This guidance note provides an overview of the general principles of UK VAT. For information about VAT outside the UK, see the VAT in the EU and VAT outside the EU guidance notes.
What is VAT?
Value added tax (VAT) is a tax on consumer expenditure and is collected on business transactions and imports. The basic principle is to charge VAT at each stage in the supply of goods and services (output tax). If the customer is registered for VAT and uses the supplies for business purposes, they will receive credit for this VAT (input tax). The broad effect is that businesses are not affected and VAT is actually borne by the final consumer.
VAT legislation and HMRC interpretation
VAT was introduced in the UK on 1 April 1973 by the Finance Act 1972. Successive Finance Acts have made amendments to the law which have also been consolidated, first by the Value Added Tax Act 1983 (VATA 1983) and subsequently by the Value Added Tax Act 1994 (VATA 1994). VATA 1994 is generally the
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