VAT: The Basics

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This post may be a little basic for most but I think it is still important to remind ourselves of the basics to VAT every once in a while. It is especially important when there are thresholds and regulations that are likely to change on an annual basis. It seems to me that often we as professionals assume that clients know and understand the basics of VAT as we all pay it on a daily basis, unfortunately this is not the case and often times small business owners are overwhelmed by the task of preparing a VAT return and the result is that mistakes are made which can lead to problems further down the road.

At the risk of stating the obvious, the current VAT rates are:
Standard rate -20%
Reduced rate – 5%
Zero rate -0%