Output VAT is defined as the VAT charged on what?

Output VAT is defined as the VAT charged on what?

• A. The VAT charged on sales or taxable supplies to customers. This amount must be paid to HMRC.
• B. The VAT charged on purchases from suppliers. This amount can be claimed back from HMRC.
• C. VAT added only to exported goods.
• D. VAT charged on capital purchases only.

Answer: (A)

Output VAT is the VAT charged on sales to customers—the tax a business adds to its taxable supplies and must pass on to HMRC. It’s the money you collect from customers on invoices for goods or services, after which you account for it with HMRC. The amount you pay back to HMRC is the difference between what you’ve collected (output VAT) and what you’ve paid on purchases (input VAT). So, the definition focuses on the tax added to your sales, not on purchases or capital costs.

Output VAT is the VAT charged on sales to customers—the tax a business adds to its taxable supplies and must pass on to HMRC. It’s the money you collect from customers on invoices for goods or services, after which you account for it with HMRC. The amount you pay back to HMRC is the difference between what you’ve collected (output VAT) and what you’ve paid on purchases (input VAT). So, the definition focuses on the tax added to your sales, not on purchases or capital costs.