Formal assessment of the worth of property, goods etc.
Value Added Tax (VAT)
A tax charged on the supply of most goods and services.
- VAT is applied to all VAT registered businesses for a Net Sale or Purchase amount.
- VAT is a tax imposed by the government on certain goods/services supplied. For current information about VAT rates etc, see HM Revenue & Customs website.
- When a business is registered for VAT it is able to claim back VAT paid on goods/services.
Expenses which change in response to changes in the level of activity.
The difference between budget and actual. Can also be used to describe the difference between the opening and closing balance of an account.
A means of assessing the difference between a predetermined cost/income and the actual cost/income.
VAT Cash Accounting
A special arrangement for accounting for VAT that must be agreed with HM Revenue & Customs. VAT is charged on amounts actually received net of amounts paid, rather than on the invoices for those amounts.
An invoice issued by a supplier registered for VAT showing the supplier’s VAT registration number, the date of issue and the tax point.
VAT Outputs and Inputs
VAT charged on sales is referred to as Outputs and VAT incurred on purchases is referred to as Inputs.
A receipt showing the amount of VAT as a separate item, together with the supplier’s VAT registration number.
All businesses registered for VAT are given a registration number. This number must be printed on all invoices.
All businesses registered for VAT are required to submit a statement each quarter to HM Revenue & Customs to account for VAT Outputs and Inputs. The VAT Return is a declaration which determines the liability to pay VAT, or receive a refund.
VAT Tax Point
The date on which VAT eligible sales are completed.