How VAT attaches to business supplies — what falls within its scope, at what rate, and how the tax is charged, recovered and accounted for to HMRC.
Whether VAT sticks as a cost or flows through to the final consumer turns on a chain of distinctions that this chapter works through in order. It begins with how VAT operates through the supply chain — output and input VAT and the four elements needed for a supply to fall within scope — before sorting supplies into standard-rated, zero-rated and exempt categories and explaining why the difference between the last two matters so much. It then covers when registration becomes compulsory, how the net position with HMRC is calculated, the conditions for recovering input VAT including partial exemption and the de minimis rule, and the blocked items such as business entertainment and motor cars. It closes with the special regime for land and buildings, including the option to tax commercial property, and the deadline for filing and paying VAT returns.
