VAT - who pays?

[One Day]

I just found out today that the person who is liable for VAT on goods or services is the supplier - not the purchaser.

Anyone else know this little nugget?!

 

[White Room]

Depending wether your vat registered or not..

 

[One Day]

I'm not (obviously - due to my ignorance!)
I always assumed it was a tax paid by the buyer.
Turns out that it's paid by the seller who claims it back via the sale.
It smells funny now!

 

[grumpygrouter]

VAT is a tax paid by the buyer not the seller. The seller charges VAT on the sale and then has to send said VAT it to HMRC. We are in effect tax collectors for HM Government.

 

[One Day]

Sellers are the tax collectors. It was a FOI request to HMRC which I read (will try and find it later) but HMRC said it was deffo the seller, not the buyer who was liable for VAT.

 

[White Room]

Sellers are the tax collectors. It was a FOI request to HMRC which I read (will try and find it later) but HMRC said it was deffo the seller, not the buyer who was liable for VAT.

Grumpygrouter is an accountant of standing, believe me his advise is fact..

 

[grumpygrouter]

Sellers are the tax collectors. It was a FOI request to HMRC which I read (will try and find it later) but HMRC said it was deffo the seller, not the buyer who was liable for VAT.

It is the seller that passes on the VAT to HMRC. The seller, when he buys his stock in will deduct the vat HE has paid on his purchase from the amount he has collected from HIS sale and send the balance to HMRC at his due period......if not I have been doing it wrong and advising ALL my VAT registered clients incorrectly for the past 17 years........

 

[Stewart]

The seller is liable for the vat they collect from the buyer and it's the seller's responsibility to make sure they collect the correct amount of vat on products and services and pas it on to the government, but it is still the buyer that pays the vat.

 

[grumpygrouter]

....unless of course the seller is dealing with things like mobile phones and other certain types of goods on which the reverse charge process applies.

 

[One Day]

OK - it's beyond me! I thought the angle I was seeing for the first time was that sellers were passing on the VAT which THEY technically are liable to HMRC for, and Joe public was paying it dutifuly for the seller without realising that it's not actually HIS tax to be paying.

I'll get me coat......

 

[grumpygrouter]

OK - it's beyond me! I thought the angle I was seeing for the first time was that sellers were passing on the VAT which THEY technically are liable to HMRC for, and Joe public was paying it dutifuly for the seller without realising that it's not actually HIS tax to be paying.

I'll get me coat......

Lol, you are right too. The seller IS responsible for passing on the VAT if he is vat registered and as such he MUST charge the VAT to the buyer. If the seller fails to add VAT to his selling price he is still liable to send the VAT amount he should have charged to HMRC, BUT it is STILL a tax on the buyer of the goods not the seller.

 

[chrisroe]

too early for me to understand

 

[Dan]

It's just another of the dozens of types of tax we pay over the years when growing a business. But it can work in your favour at times being VAT registered.

Grumpy is right though. It's the buyer paying it to the seller (as there will be VAT on your bills from the suppliers) - but you're clearing that bill. So you're giving it to the supplier, and then he pays it to HMRC. Though if you were VAT registered, the amount you paid on that bill, you'd claim back each quarter.

It's money floating around that in the end, gets paid for by the end user who cannot claim it back. So your customers who sort of pay your wage, pay you money which you pay to the supplier which includes vat, he claims it back from the government, so it's the end customers that can't claim it back who has to stand the costs. All the VAT registered people involved just pass it around for a while. Sort of.