At its heart, Value Added Tax or VAT for short, is a simple concept. A tax is levied at the source on all products and services. However, the system, being what it is, soon rules and exceptions start to come through. This can be a minefield for the business owner. Therefore to make sure you are following the rules correctly, you shul look to https://chippendaleandclark.com/accountant-in-bath/ the Bath Accountants.
VAT was introduced in 1973. It was something we had to adopt as part of joining the then EEC. Technically as we are no longer a part of the EU, we could drop it, but it seems very unlikely.
The list of what is exempt and what is not is far too long for this article. The most notable exceptions to VAT are; printed media, Children’s clothes and Nappies, Cake, Undecorated Gingerbread men (which would explain the price difference).
Services also fall under VAT; everything from what the Plumber or the Landscape Gardener charges is covered. Again there are exceptions to these rules. Education and training, for example, are free from VAT along with Sporting activities. Financial services payments are also free. You don’t pay VAT on Insurance or mortgage payments, thank goodness.
There is a lot of debate about what VAT should be applied to, and just because it isn’t used on something at the moment, it doesn’t mean it won’t be at a later date. Governments have reduced it to help specific industries at certain times.