Vat

sscors

Hi

not quite sure why purchases and creditors are £470 and not £400

A business makes sales on credit of £1000 plus VAT and purchases on credit of £400 plus VAT. How would these be accounted for if the sales are exempt activities, whereas the purchases were std rated

Any help would be much appreciated

coojee

Because if sales are exempt you can't reclaim the VAT on the purchases.