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Glossary of VAT Terms

There are numerous terms used in the VAT world. Here is a summary of some of the key expressions:

  • Accounting Period: see Tax Period
  • Acquisitions: goods brought into the UK from other EU countries (also see Imports)
  • Capital Goods Scheme: a 5-year or 10-year adjustment for Input Tax relating to “capital items”
  • Corporate Body: an incorporated body such as a limited company, limited liability partnership, friendly, industrial or provident society
  • Cost Sharing Exemption: a special arrangement for VAT exempt businesses to share services
  • De Minimis: an arrangement where normally irrecoverable Input Tax relating to exempt supplies can be recovered, subject to certain limits
  • Dispatches: goods sent to another EU country
  • Distance Sales: where a business in one EU country sells and ships goods directly to consumers in another EU country (e.g. mail-order sales)
  • Eligible Body: a school, university, public body, a non-profit (charity) or an organisation teaching English as a foreign language
  • Exports: goods sent to a non-EU country
  • Imports: goods brought into the EU from a country outside the EU
  • Input Tax: the VAT paid on purchases
  • Output Tax: the VAT charged on sales
  • Partial Exemption: an apportionment of Input Tax between exempt and VAT-able supplies
  • Place of Supply: the country in which a supply of goods or services must be accounted for VAT purposes
  • Residual VAT: VAT incurred on purchases for use in making different types of supplies (e.g. business, non-business, standard rated, exempt)
  • Reverse Charge: VAT arising when purchasing goods or services from another EU country
  • Self-billing: where a business receiving income from the academy issues the VAT invoice on behalf of the school and sends a copy with their payment (e.g. some photographer commission and catering arrangements)
  • Supply: selling or otherwise providing goods or services
  • Supply of Goods: when exclusive ownership of goods passes from one person to another
  • Taxable Person: any business entity that buys or sells goods or services and is required to be registered for VAT – this includes individuals, partnerships, companies, clubs, associations and charities
  • Taxable Supplies: all goods and services sold or otherwise supplied by a taxable person which are liable to VAT at the standard, reduced or zero rate
  • Taxable Turnover: the total value – excluding VAT – of the taxable supplies made in the UK
  • Tax Period: the period of time covered by the VAT Return, usually quarterly
  • Tax Point: the date when VAT has to be accounted for – for goods, this is usually when goods are delivered or taken away, for services, this is usually when the service is performed
  • Time of Supply: see Tax Point
  • VAT126: Form used by unregistered academies to reclaim VAT

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