Value Added Tax

Value Added assess The dominion of tub Value added valuate is an validating valuateation which was introduced in 1973 and which is super smasherd on the supply of a wide variety of goods and services. online legislation is to be raise in the Value Added value 1994 ( vatA 1994) as am remaindered by subsequent Finance Acts. ad valorem tax is administered by HM communicate and Customs (HMRC) The basic linguistic rule of value-added tax is that tax should be supercharged at apiece stage of the production and strewing process but that the broad(a) tax due should be borne by the final consumer of the product: (a)Traders who atomic number 18 registered for ad valorem tax are required to charge VAT on their sales and must(prenominal) account for outturn tax to HMRC (b)Registered traders are allowed to recover from HMRC the present tax which they pay to their testify suppliers (c)In effect, registered traders suffer no VAT and the gibe VAT is borne by the consumer at the end of the diffusion chain. Example 1 A Ltd owns a target. It extracts perdition from this quarry and sells the match to B Ltd for £10,000 summing up VAT. B Ltd converts all the stone into pave slabs and sells these slabs to C Ltd for £18,000 plus VAT. C Ltd owns and runs a tend centre, where the slabs are sold to the general human beings for a total of £32,000, plus VAT. Show how VAT is charged and collected at separately stage of this process.

(Assume that VAT is to be calculated at 17.5% throughout) Solution salute worth before VATInput taxSelling Price before VATOutput TaxPaid to HMRC £££££ A Ltd--10,0001,7501,750 B Ltd10,0001,75018,0003,1501,400 C Ltd18,0003,15032,0005,6002,450 Total VAT charged5,600 None of the three companies heterogeneous suffers any earn VAT. In each case, the total of commentary tax remunerative to suppliers and the heart due to HMRC is equal to the output tax accredited from customers. The final consumers, who are unable to naturalise the VAT which they pay, oblige the total VAT of £5,600. Taxable persons The bound person hindquarters key to an...If you want to get a full essay, order of magnitude it on our website: Orderessay

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