by MidDevon » 11 Apr 2013, 07:40
Matt
It get's a bit more complicated. There are 2 types of VAT registered companies
Companies have to register for VAT when their annual turnover exceeds approx £77,000 a year. This means the chap who may be a window cleaner or run a small hairdresser does not generally have to bother. As a business they pay VAT on everything they purchase but cannot claim anything back.
Most smaller companies with a turnover of between £77,000 and £220,000 register under what is called the "Flat rate Scheme". This means they charge VAT on anything they sell (as long as it is vatable) but pay the VATman a % of their turnover which is around the 6.5% to 8.5% of annual turnover depending in various factors. The Government give discounts in year 1 for example to encourage companies to do the right thing and register.
Companies who's annual turnover exceeds around £220,000, such as TUFC and 1000 Flags Limited (just plucking a random company out of thin air here!) have to become a Limited Company. This essentially means they have directors and share ownership and are registered at companies house.
Limited Companies are essentially tax collectors for the Government, charging VAT on everything they sell within the UK and EU. To offset this charge they keep the invoices for everything they purchases and can off-set some of that cost against the VAT they have paid to other companies.
To answer your question in part, if the club buy a football to sell in the club shop for £1.20 from a uk wholesaler, then they can claim 20p back VAT for the purchase.
If they then sell that same ball for £6 in the club shop, then £1 of that is VAT which they pay the Government so essentially the net loss on VAT is 80p.
However the club can also claim back the VAT on the plastic bag the purchase is put in, the staff uniform etc, so some but not all of that tax comes back.
VAT is essentailly a TAX on the last person who buys an item, so it is generally the man in the street who pays the VAT
To complicate matters more, my business does a lot of exports, whilst we are essentially retailers, around 1/3rd of what we sell goes outside the European Union, e.g USA, Canada, Switzerland, South Africa etc and those sales are not subject to VAT. So exporting is good for British business on the whole.
Matt
It get's a bit more complicated. There are 2 types of VAT registered companies
Companies have to register for VAT when their annual turnover exceeds approx £77,000 a year. This means the chap who may be a window cleaner or run a small hairdresser does not generally have to bother. As a business they pay VAT on everything they purchase but cannot claim anything back.
Most smaller companies with a turnover of between £77,000 and £220,000 register under what is called the "Flat rate Scheme". This means they charge VAT on anything they sell (as long as it is vatable) but pay the VATman a % of their turnover which is around the 6.5% to 8.5% of annual turnover depending in various factors. The Government give discounts in year 1 for example to encourage companies to do the right thing and register.
Companies who's annual turnover exceeds around £220,000, such as TUFC and 1000 Flags Limited (just plucking a random company out of thin air here!) have to become a Limited Company. This essentially means they have directors and share ownership and are registered at companies house.
Limited Companies are essentially tax collectors for the Government, charging VAT on everything they sell within the UK and EU. To offset this charge they keep the invoices for everything they purchases and can off-set some of that cost against the VAT they have paid to other companies.
To answer your question in part, if the club buy a football to sell in the club shop for £1.20 from a uk wholesaler, then they can claim 20p back VAT for the purchase.
If they then sell that same ball for £6 in the club shop, then £1 of that is VAT which they pay the Government so essentially the net loss on VAT is 80p.
However the club can also claim back the VAT on the plastic bag the purchase is put in, the staff uniform etc, so some but not all of that tax comes back.
VAT is essentailly a TAX on the last person who buys an item, so it is generally the man in the street who pays the VAT
To complicate matters more, my business does a lot of exports, whilst we are essentially retailers, around 1/3rd of what we sell goes outside the European Union, e.g USA, Canada, Switzerland, South Africa etc and those sales are not subject to VAT. So exporting is good for British business on the whole.
