UK Accounting Glossary
The Value Added Tax, or VAT, in the European Union is a general, broadly based consumption tax assessed on the value added to goods and services.
Value Added Tax (VAT) is a charge on the taxable supplies of goods and services made in the UK by a taxable person in the course or furtherance of a business.
Where appropriate, a trader adds VAT to sales and must account to HMRC for the output tax.
The input tax paid on purchases can be deducted from the output tax due.
VAT, indirect taxation that falls on the final customer, was introduced in 1973 when the UK joined the European Economic Community (ECC).
Unless they are zero-rated goods and services, exempt supplies or special rates goods, all goods and services in the UK are currently taxed at a rate of 20%.
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This glossary post was last updated: 4th May 2019.