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Budget - beer up 1p

VAT is short for VALUE ADDED tax. That is tax is levied every time the goods change hands at a different price ie when value is added, so a wholesaler will pay VAT on what is received from the brewers . When sold on to the licensee , the licensee pays VAT on it. Finally the customer pays the full whack. Everyone down the chain will claim back whatever they have paid in VAT and send HMCE the remainder of the VATthey collected. So at every stage the Treasury receives 17.5% of any mark up , the brewer , wholesaler and licensee pay nothing out of their own pockets because the customer pays the lot.

Reply to
valeofbelvoirdrinker
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On Wed, 23 Mar 2005 11:02:49 +0000, Peter Corlett wrote (in message ):

Surely that would only be the case if the product continually changed hands for the same price, it is safe to assume that the price goes up with each transaction.

Reply to
Steve Pickthall

Steve Pickthall wrote: [...]

When a VAT-registered business sells goods or services that are liable for VAT, they must add 17.5% VAT to the price and pay this portion to the taxman. This is the case whether the buyer is a consumer, or another business. (I'll ignore the exceptions for now, as they're not relevant here.)

If the buyer is another business, they may reclaim the VAT paid by the seller. However, if they sell the goods on, they must again charge and VAT on the full amount. What they paid is irrelevant.

Reply to
Peter Corlett

On Wed, 23 Mar 2005 16:27:51 +0000, Peter Corlett wrote (in message ):

Yes I know how it works, your statement "the net effect is that there is no VAT on B2B transactions" is still wrong unless goods continually change hands for the same price.

Reply to
Steve Pickthall

Which of course can't happen since you have performed a service in simply selling on the goods and therefore must add VAT at 17.5% to the price (unless you want lose money to the extent of approximately 14.9% per transaction).

I'm not sure how many of the people arguing with you run businesses Steve, but I'm pretty sure they wouldn't last long if they ran them as described. At least not if the VAT guys came round: a brewer round here forgot to deal with that minor issue and then got "hotel" accommodation for a couple of years.

Reply to
Steven Pampling

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