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VAT: Zero Rated vs Exempt Goods - What's the difference? - YouTube
Channel: Accounting and Tax Academy by Tony D
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welcome to the third episode in our v80
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series
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so far we've covered the basics of eit
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and voluntary registration
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so be sure to click the link to the full
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vat playlist if you've not seen those
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episodes yet
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today we're getting into the difference
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between zero rated and exempt suppliers
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and how these impact your business
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now this video will cover what are zero
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rated supplies and how it could benefit
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your business
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goods and services to the eu and non-eu
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countries
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from the uk that could fall under zero
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rated supplies
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and what are exempt suppliers before we
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get into today's video be sure to hit
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that subscribe button
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as well as the notification bell to make
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sure you're kept up to date
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with all our latest content this really
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helps us to produce more helpful videos
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and get you free quality advice from
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real qualified
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accountants
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a charge to uk v80 arises when a taxable
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supply
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of goods and services is made in the uk
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by a taxable person
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the term person can apply to an
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individual sole trader a partnership
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a limited company llp or any other body
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that supplies goods and services in the
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course of business
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a taxable supply is any supply of goods
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and services
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in the uk other than a supplier which is
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specifically exempted from the ot
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so a taxable supply includes standard
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rated reduce rated and
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zero rated
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so zero rated suppliers are by
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definition a taxable supplier
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why is this significant well let me
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explain with an example
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let's say you are a business supplying
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non-luxury food such as meat and poultry
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that are zero rated
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each food item you sell costs 100 pounds
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multiplied by a zero percent bat
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which equals a hundred pounds so you are
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technically charging vat just at the
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zero rate
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a full that invoice receipt is still
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issued with your vat registration number
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on it
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now the beauty of zero rated supplies is
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that you
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can claim back any vat your business has
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incurred
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so for example let's say in the year
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your business turned over a hundred
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thousand pounds of
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zero rated suppliers and it incurred
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fifteen thousand pounds of vat in goods
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and services in the course of business
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your vat return would look something
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like this
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sales v80 actually collected is zero
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input v80 actually incurred is fifteen
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thousand pounds
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so therefore a that refund of 15 000
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pounds would be due to your business
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it's worth noting your business will
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have to be that registered in order for
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the above to work
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you cannot simply do this by supplying
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zero rated goods without being that
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registered
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we've compiled a free comprehensive list
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of zero-rated groups and suppliers for
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you to download and keep for future
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reference
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simply click on the link below to head
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to our website and download the pdf
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generally speaking goods traded between
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the uk and
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eu countries are also zero rated subject
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to conditions
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exports of goods from the uk to non-eu
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countries can also be zero rated again
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subject to various conditions to get
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more information on this you can refer
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to vat notice 703
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through the link below in the
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description box it's quite technical but
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definitely educational and
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straight from the horse's mouth hmrc
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themselves
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exempt supplies are exactly what they
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suggest exempt from uk vat
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they are not classified as a taxable
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supply and therefore if your business
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makes exclusively exempt suppliers
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the suppliers are not subject to vat at
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all at any rate
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however your business cannot register
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for vat regardless of your turnover
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level
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if it is only making exempt supplies
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now if your business makes any
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combination of exempt standard zero
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rated
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and reduced suppliers then we strongly
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suggest you speak to a trustworthy
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accountant
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as this is where things get rather
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complex and you will most likely need a
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vit evaluation
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if you don't know where to start click
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on the link in the description box below
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to head to our site where we explain
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what a vat evaluation entails in a lot
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more detail
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you can also find a full and
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comprehensive list of exempt groups and
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suppliers
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in a handy pdf for you to download and
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keep
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i hope this video has helped you
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understand this particular v80 topic in
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a little bit more detail
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and taking you closer to knowing your
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numbers as always
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let me know in the comments your
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thoughts on today's video or if there
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are any topics you'd like us to cover in
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the future
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finally be sure to like and subscribe as
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this really does help us to get our
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content
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out there this is tony d'angel for the
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accounting and tax academy
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thanks for tuning in
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you
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