An extensive overview of the Value Added Tax (VAT) system, defining it as a consumption tax levied on goods and services, collected by businesses for the government. It thoroughly explains the core concepts of Output VAT (tax charged on sales) and Input VAT (tax paid on purchases), detailing how businesses calculate the net amount payable or reclaimable from HM Revenue and Customs (HMRC). The text also outlines the mandatory VAT registration threshold, differentiates between standard-rated, reduced-rate, zero-rated, and exempt supplies, and examines the complexities of VAT in property transactions, especially regarding the strategic use of the Option to Tax on commercial properties. Finally, it emphasizes the importance of accurate record-keeping and tax invoices for compliance.
