{m}.{s}.1VAT is charged by many businesses on the goods and services they provide.
Output VAT is charged by a business on its sales. This is credited to the VAT account.
Input VAT is suffered by a business on goods and services it buys. This is debited to the VAT account.
If output VAT exceeds input VAT, the balance is due to be paid to HM Revenue & Customs.
If input VAT exceeds output VAT, the balance is due to be recovered from HM Revenue & Customs.
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{m}.{s}.2For a VAT rate of 15%:
{m}.{s}.3In practice, it may be best to keep three VAT accounts: