General principles of VAT

Produced by Tolley
General principles of VAT

The following Value Added Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • General principles of VAT
  • Basis of charge
  • Operation of VAT
  • Taxable persons
  • VAT rates
  • VAT administration

IP COMPLETION DAY: 11pm (GMT) on 31 December 2020 marked the end of the Brexit transition / implementation period entered into following the UK’s withdrawal from the EU. At this point in time, key transitional arrangements came to an end and significant changes began to take effect across the UK’s VAT and customs regime. This document contains guidance on subjects potentially impacted by these changes. Before continuing your research, see the Brexit — overview guidance note.

Basis of charge

Value added tax (VAT) is a tax levied on the supply of goods and services in the UK. UK VAT is levied on certain supplies goods and services supplied within the UK and on the import of goods into the UK from outside the European Union (EU). The purchase of goods and from suppliers located in other EU member states are also subject to VAT and there are special VAT rules that need to be applied by business trading across borders within the EU. The rules are fully explained in the following guidance notes Exporting goods to non-EU countries (until 31 December 2020), Supplies of goods within the EU (until 31 December 2020) and Buying goods from other EU vendors (rules until 31 December 2020)

VAT was introduced in the UK in 1973, as a result of the UK's entry into the European Economic Community.

As the UK is part of the EU, any UK VAT legislation must comply with the relevant EU Directive. In the UK the EU Directives are implemented through the Value Added Tax Act 1994 (VATA 1994) and various Statutory Instruments (SI).

It should be noted that where there are inconsistencies between the UK legislation and the EU Directives EU law takes precedence. As a result, it is possible that an EU member state has incorrectly applied the EU legislation or acted outside the 'intention' of the EU legislation. Therefore, there is a Court of Justice of the European Union (CJEU), also still known

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