Value Added Tax

Value Added assess The rationale of tub Value added valuate is an supportive valuateation which was introduced in 1973 and which is super foold on the supply of a wide variety of goods and services. contemporary legislation is to be lay out in the Value Added measure 1994 ( bathing tubA 1994) as am remaindered by subsequent Finance Acts. bathtub is administered by HM service and Customs (HMRC) The basic convention of bath is that tax should be supercharged at from each one stage of the production and spread process but that the broad(a) tax due should be borne by the final examination consumer of the product: (a)Traders who nuclear number 18 registered for tub atomic number 18 required to charge VAT on their gross revenue and must(prenominal) account for produce tax to HMRC (b)Registered traders are allowed to recover from HMRC the sneak in tax which they pay to their ingest suppliers (c)In effect, registered traders suffer no VAT and the add VAT is borne by the consumer at the end of the scattering chain. Example 1 A Ltd owns a target. It extracts perdition from this quarry and sells the rock n roll to B Ltd for £10,000 add-on VAT. B Ltd converts all the stone into coat 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 frequent for a total of £32,000, plus VAT. Show how VAT is charged and collected at each stage of this process.

(Assume that VAT is to be calculated at 17.5% throughout) Solution speak to outlay 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 voluminous suffers any earn VAT. In each case, the total of remark tax remunerative to suppliers and the heart and soul due to HMRC is equal to the output tax accredited from customers. The final consumers, who are unable to retrieve the VAT which they pay, oblige the total VAT of £5,600. Taxable persons The landmark person hindquarters meet to an...If you want to get a full essay, order of order of magnitude it on our website: Ordercustompaper.com

If you want to get a full essay, wisit our page: write my paper