Tutorial Book - Page 38 - Zero-rated and exempt supplies

IkklewabbitIkklewabbit Settling In NicelyRegistered Posts: 16
Hello

I have been told to ready the first 2 chapters of the tutorial book and came across something I didn't understand. I asked my AAT Tutor and even he couldn't explain it. I suggested asking you guys so here goes.

Page 38 - Zero-rated and exempt supplies

Quote.......... The effect of this is that the supplier of such goods cannot charge VAT on outputs (as is the case with zero-rated goods) but cannot claim back all the tax which has been paid on inputs........ unquote

Any ideas?


Thanks

Claire

Comments

  • vishavisha Well-Known Registered Posts: 218
    Hi

    The quote below relates to exempt supplies and therefore the statement below is true

    “The effect of this is that the supplier of such goods cannot charge VAT on outputs but cannot claim back all the tax which has been paid on inputs”

    The quote below relates to zero rated supplies and therefore the statement above is NOT true

    “(as is the case with zero-rated goods)”

    You query actually relates to “The scope of Vat”

    There is only two answer to this:

    Either

    the sale of goods/services fall with in the scope of Vat
    And therefore Vat Rates applicapable are

    A) Zero percent 0%
    B) Lower Rate 5%
    C) Standard rate 17.5%

    Note:- the chancellor of exchequer can change any of the above rates at any time now or in the future.

    Further the HMR&C has every right to come and inspect you accounts

    OR

    the sale of goods/services DO NOT fall with in the scope of Vat.

    Therefore NO vat chargeable.

    HMR&C has NO right to come and inspect you accounts

    If you are Wholly supplying an exempt goods/services to your customers such as

    A) Post office – postage stamps, postal orders, car road tax, etc
    B) Options – Dispensing supplies only
    C) Educational Training (provided it is wholly funded by skills council)
    D) Insurance – Car/house/life
    E) Providing credit – bank loans/hire and purchase finance / lease finance
    F) Subscription to membership organisation – AAT subscription

    You MUST NOT charge vat to your customer. And you are not eligible for VAT registration. Therefore you can not claim INPUT vat for any purchases from HMC&R

    If you are Wholly supplying zero rated goods/services to your customers such as

    1. food - but not meals in restaurants or hot takeaways
    2. books and newspapers
    3. children's clothing and shoes
    4. public transport

    You MUST charge vat to your customer at a 0% on the total of supplies. Provided you are registered with HMC&R. Therefore you CAN claim INPUT vat for any purchases from HMC&R

    The zero rate Vat can change if Future. It is not guranteed to remain at 0%.
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