VAT - who pays?

[grumpygrouter]

OK - it's beyond me! I thought the angle I was seeing for the first time was that sellers were passing on the VAT which THEY technically are liable to HMRC for, and Joe public was paying it dutifuly for the seller without realising that it's not actually HIS tax to be paying.

I'll get me coat......😳

Lol, you are right too. The seller IS responsible for passing on the VAT if he is vat registered and as such he MUST charge the VAT to the buyer. If the seller fails to add VAT to his selling price he is still liable to send the VAT amount he should have charged to HMRC, BUT it is STILL a tax on the buyer of the goods not the seller.

 

[chrisroe]

too early for me to understand

 

[Dan]

It's just another of the dozens of types of tax we pay over the years when growing a business. But it can work in your favour at times being VAT registered.

Grumpy is right though. It's the buyer paying it to the seller (as there will be VAT on your bills from the suppliers) - but you're clearing that bill. So you're giving it to the supplier, and then he pays it to HMRC. Though if you were VAT registered, the amount you paid on that bill, you'd claim back each quarter.

It's money floating around that in the end, gets paid for by the end user who cannot claim it back. So your customers who sort of pay your wage, pay you money which you pay to the supplier which includes vat, he claims it back from the government, so it's the end customers that can't claim it back who has to stand the costs. All the VAT registered people involved just pass it around for a while. Sort of.