VAT Principles and Concepts — Glossary · Professional Certificate in VAT and Indirect UK Taxation

Accrued Output VAT – VAT that has been incurred on sales but has not yet… #

Accrued Output VAT – VAT that has been incurred on sales but has not yet been invoiced to the customer.

Adjustment Note – A document used to make changes to a VAT return, usuall… #

Adjustment Note – A document used to make changes to a VAT return, usually due to errors or omissions in previous returns.

Apportionment – The process of dividing an input tax credit between taxab… #

Apportionment – The process of dividing an input tax credit between taxable and exempt supplies in order to determine the amount that can be recovered.

Average Consumer Price – The average price paid by consumers for a partic… #

Average Consumer Price – The average price paid by consumers for a particular product or service, used to determine the VAT liability for certain supplies.

B2B – Business #

to-business transactions, where both the supplier and customer are VAT-registered businesses.

B2C – Business #

to-consumer transactions, where the supplier is a VAT-registered business and the customer is not.

Cash Accounting – A method of accounting for VAT where VAT is only paid w… #

Cash Accounting – A method of accounting for VAT where VAT is only paid when payment is received from the customer.

Capital Goods Scheme – A set of rules for adjusting the VAT recovery on c… #

Capital Goods Scheme – A set of rules for adjusting the VAT recovery on certain capital assets, such as buildings and land, over a period of several years.

Chargeable Event – An event that triggers a VAT liability, such as the sa… #

Chargeable Event – An event that triggers a VAT liability, such as the sale of goods or the provision of services.

Compulsory VAT Registration – The requirement for a business to register… #

Compulsory VAT Registration – The requirement for a business to register for VAT if its taxable turnover exceeds a certain threshold.

Deemed Supplies – Supplies that are treated as taking place for VAT purpo… #

Deemed Supplies – Supplies that are treated as taking place for VAT purposes, even if no actual transaction has occurred.

Disbursements – Costs incurred by a business on behalf of a customer, whi… #

Disbursements – Costs incurred by a business on behalf of a customer, which are not subject to VAT.

Domestic Reverse Charge – A method of accounting for VAT on certain const… #

Domestic Reverse Charge – A method of accounting for VAT on certain construction services, where the customer accounts for the VAT instead of the supplier.

EU VAT Refund Scheme – A scheme that allows non #

EU businesses to reclaim VAT incurred in EU countries.

Exempt Supplies – Supplies that are not subject to VAT, such as financial… #

Exempt Supplies – Supplies that are not subject to VAT, such as financial services and certain types of education.

Flat Rate Scheme – A simplified method of accounting for VAT, where a fla… #

Flat Rate Scheme – A simplified method of accounting for VAT, where a flat rate percentage is applied to the business's total sales.

Fraudulent evasion of VAT – A criminal offense involving the deliberate n… #

Fraudulent evasion of VAT – A criminal offense involving the deliberate non-payment or underpayment of VAT.

Golden Rule – The rule that states that input tax can be recovered in ful… #

Golden Rule – The rule that states that input tax can be recovered in full, as long as it relates to taxable supplies made by the business.

Group Registration – The registration of multiple VAT #

registered businesses as a single entity for VAT purposes.

Input Tax – VAT incurred on purchases made by a VAT #

registered business.

Input Tax Credit – The amount of input tax that a VAT #

registered business can recover from HMRC.

Margin Scheme – A method of accounting for VAT on second #

hand goods, where VAT is calculated on the difference between the purchase and sale price.

Marginal VAT – VAT incurred on inputs that are used to make both taxable… #

Marginal VAT – VAT incurred on inputs that are used to make both taxable and exempt supplies.

Optional VAT Registration – The voluntary registration for VAT by a busin… #

Optional VAT Registration – The voluntary registration for VAT by a business whose taxable turnover is below the compulsory registration threshold.

Output Tax – VAT charged on sales made by a VAT #

registered business.

Partial Exemption – The situation where a VAT #

registered business makes both taxable and exempt supplies, and is only partially entitled to recover input tax.

Place of Supply – The location where a supply is deemed to take place for… #

Place of Supply – The location where a supply is deemed to take place for VAT purposes.

Reverse Charge – A method of accounting for VAT where the customer accoun… #

Reverse Charge – A method of accounting for VAT where the customer accounts for the VAT instead of the supplier.

Retail Schemes – Simplified methods of accounting for VAT used by retaile… #

Retail Schemes – Simplified methods of accounting for VAT used by retailers.

Single Market – The EU's internal market, where goods and services can be… #

Single Market – The EU's internal market, where goods and services can be traded without restrictions.

Taxable Supplies – Supplies that are subject to VAT, such as the sale of… #

Taxable Supplies – Supplies that are subject to VAT, such as the sale of goods and the provision of services.

Tone and mileage adjustments – Adjustments made to the VAT recovery on mo… #

Tone and mileage adjustments – Adjustments made to the VAT recovery on motor cars, based on the business use of the vehicle.

Transfer of a Going Concern – The sale of a business as a going concern,… #

Transfer of a Going Concern – The sale of a business as a going concern, where VAT is not charged on the sale.

Triangulation – A VAT arrangement involving three parties in different EU… #

Triangulation – A VAT arrangement involving three parties in different EU countries, where the middle party does not have to account for VAT.

VAT – Value Added Tax, a type of consumption tax levied on the sale of go… #

VAT – Value Added Tax, a type of consumption tax levied on the sale of goods and services in the UK.

VAT Account – A separate account maintained by a VAT #

registered business to record its VAT transactions.

VAT Certificate – A document issued by HMRC to a VAT #

registered business, showing its VAT registration number and other details.

VAT Compliance – The process of ensuring that a business is meeting its V… #

VAT Compliance – The process of ensuring that a business is meeting its VAT obligations, such as submitting accurate VAT returns and keeping proper records.

VAT Control Statement – A statement produced by HMRC to check the accurac… #

VAT Control Statement – A statement produced by HMRC to check the accuracy of a VAT return.

VAT Fraud – The deliberate evasion of VAT, usually involving the creation… #

VAT Fraud – The deliberate evasion of VAT, usually involving the creation of fake invoices or the non-payment of VAT.

VAT Group – A group of VAT #

registered businesses that are treated as a single entity for VAT purposes.

VAT Inspection – A visit by HMRC to a VAT #

registered business to check its VAT compliance.

VAT Invoice – A document issued by a VAT #

registered business to its customers, showing the VAT charged on the supply.

VAT Liability – The amount of VAT that is due on a supply #

VAT Liability – The amount of VAT that is due on a supply.

VAT Margin Scheme – A method of accounting for VAT on second #

hand goods, where VAT is calculated on the difference between the purchase and sale price.

VAT MOSS – Mini One Stop Shop, a simplified system for accounting for VAT… #

VAT MOSS – Mini One Stop Shop, a simplified system for accounting for VAT on digital services supplied in the EU.

VAT Number – A unique identifier issued by HMRC to a VAT #

registered business.

VAT Return – A document submitted to HMRC by a VAT #

registered business, showing its VAT transactions for a specified period.

VAT Registration – The process of registering a business for VAT with HMR… #

VAT Registration – The process of registering a business for VAT with HMRC.

VAT Registration Threshold – The level of taxable turnover at which a bus… #

VAT Registration Threshold – The level of taxable turnover at which a business is required to register for VAT.

VAT Repayment – A refund of VAT paid by a VAT #

registered business.

VAT Return Period – The frequency at which a VAT #

registered business must submit a VAT return, usually quarterly.

Zero #

rated supplies – Supplies that are subject to VAT at a rate of 0%, such as most food and children's clothing.