How VAT moves through a firm's books — output and input tax, the entries for billing it, and the agency–principal divide that decides whose VAT a disbursement carries.
A single payment to a third party can demand two entirely different sets of entries, and the difference turns on whose supply it really is. This chapter begins with the essentials — output and input tax, the standard rate, and the HMRC account that nets the two off — before setting out the entries for issuing a bill with VAT and receiving the client's payment. It then draws the distinction between agency and principal disbursements and works through the recording of each, including what changes when the client account holds no funds. It closes with the special treatment of court fees and counsel's fees, and the rules governing transfers from client to business account once a bill is delivered, together with the entries for an abatement.
