Fully understanding VAT

[NewTime]

Everytime I feel as if I fully understand VAT - I seem to get a little confused.

After reading about VAT through many places, I got to get grips with it. You pay VAT on goods, then you claim it back.

But I went to a website to buy goods today and told if I was a business, that I could get goods at "exlcuding VAT" price.

Does this mean if I can choose to pay VAT on goods and pay it back later and/or get the goods "excluding VAT" to avoid balancing it later and just pay the VAT I charged?

Thanks (I know this sound silly for many)

 

[japancool]

But I went to a website to buy goods today and told if I was a business, that I could get goods at "exlcuding VAT" price.

A UK based website?

 

[NewTime]

A UK based website?

Hi - Yes, I think so (it was a few hours ago)

 

[NewTime]

It was Viking Direct (.co.uk) I think

 

[japancool]

It was Viking Direct (.co.uk) I think

Then what they are doing is simply *showing* you the ex-VAT prices, because that is the price you effectively pay after you reclaim the VAT. You will still pay VAT on top of the displayed price when you checkout.

This is fairly common on B2B websites.

 

[NewTime]

Then what they are doing is simply *showing* you the ex-VAT prices, because that is the price you effectively pay after you reclaim the VAT. You will still pay VAT on top of the displayed price when you checkout.

This is fairly common on B2B websites.

Ok, thanks.

A little weird for me, as other sites, even B2B, don't do it in such a way. But of course some do. I simply suppose, I am paying the VAT, then claiming it back. Therefore it doesn't matter if I buy as a private customer or a trade/business customer, as they put it...

 

[Newchodge]

Ok, thanks.

A little weird for me, as other sites, even B2B, don't do it in such a way. But of course some do. I simply suppose, I am paying the VAT, then claiming it back. Therefore it doesn't matter if I buy as a private customer or a trade/business customer, as they put it...

It does matter. If you are buying as a provate customer you cannot claim back the VAT.

 

[WaveJumper]

You find quite a few sites who feel their customer base is more B2B (for example the likes of Scew-fix) show price ex-vat

 

[Mark T Jones]

The accepted norm is that vendors will quote prices ex-VAT if their target market is b 2 b, or Inc VAT if its b 2 c

It works well once you get used to it.

Then you go the US and discover late on that they add sales tax at point of sale - even in stores, which comes as a bit of a shock!

 

[jimbof]

I think more than norm, it is set out in advertising rules - without them we'd still have B2Cs advertising ex-VAT to consumers. Businesses are looking to gain every edge possible, which naturally comes down to showing the most attractive possible price. It is only the regulations that have prevented businesses from advertising the ex-VAT pricing where the target customers are predominantly retail members of the public.

The rules are here:
https://www.asa.org.uk/advice-online/compulsory-costs-and-charges-vat.html

 

[DontAsk]

You find quite a few sites who feel their customer base is more B2B (for example the likes of Scew-fix) show price ex-vat

Only if you want it to. Top-right of every Screwfix page is a INC VAT - EX VAT switch.

 

[Paul Kelly ICHYB]

You pay VAT on goods, then you claim it back.

NNNNOOOOOOOOOO.

This is one of the most thrown around comments that is extremely misleading. Too many people think that they just get a wad of money every so-often!

The VAT you pay (assuming you are registered) is the VAT you collect on sales MINUS the VAT paid (on goods/supplies/services). In most circumstances, you do not get anything back.

All you are doing is offsetting the amount you owe by what you spent!

 

[MyAccountantOnline]

Everytime I feel as if I fully understand VAT - I seem to get a little confused.

After reading about VAT through many places, I got to get grips with it. You pay VAT on goods, then you claim it back.

But I went to a website to buy goods today and told if I was a business, that I could get goods at "exlcuding VAT" price.

Does this mean if I can choose to pay VAT on goods and pay it back later and/or get the goods "excluding VAT" to avoid balancing it later and just pay the VAT I charged?

Thanks (I know this sound silly for many)

VAT is actually a very complex tax and its why some tax specialists deal solely with VAT.

You say 'You pay VAT on goods, then you claim it back' - that depends on whether you are VAT registered and what VAT scheme you are using.

'Does this mean if I can choose to pay VAT on goods and pay it back later and/or get the goods "excluding VAT" to avoid balancing it later and just pay the VAT I charged?' No you have to pay the same price whether you are VAT registered or not ie the price plus VAT when you buy goods.

 

[jimbof]

Even in the case of trading with businesses, it's often unhelpful to show the ex-VAT pricing. Many business will not be VAT registered, or on a flat rate scheme. And even those who are registered for standard VAT schemes and can deduct it from their output VAT will need to pay for it with real today pounds, not imaginary 1-4 month in the future pounds!