vat

[saf250780]

vat why do shopkeepers pay vat on goods brought at a cash+carry then every quater they have to pay vat to the tax man again

[Fiona_F]

V.A.T. stands for Value Added Tax. The tax is added at every stage till it gets to the consumer. SO if shopkeeper buys �100. at C+C, he pays �17.50 tax making a total of �117.50.

IF shopkeeper sells those goods for �200., the tax element is then �29.76. Because the actual sale is only �170.24.

THEN the shopkeeper pays to Customs & Excise, the sum of �12.16 being The total tax due �29.76 LESS the amount that he paid to C+C and they paid to Customs.

So he does not pay the whole of the tax to customs as he has already paid part to C+C.

Hope this makes sense.

[Fiona_F]

OR another example:

Shopkeeper buys goods at C+C for �571.43 for which he has to pay another �100. VAT (17.5%)

He sells same goods for �1,714.29 and charges his customer �300. VAT.

SO customer has paid VAT �300. which goes to tax man.
Tax man gets �100. from C+C and �200 from shopkeeper.

If you are interested enough, you must remember that C+C have to pay VAT to their supplier, which they would deduct from shopkeepers payment before sending to tax man. And if shopkeeper is selling to another trader, then they in turn would charge more VAT, deducting the �300 they have already paid to shopkeeper before sending to tax man. In theory goods could pass through ten traders, each adding on tax at that stage but deducting tax paid at previous stage.

[Markandshez]

Or a simpler answer:

Because many years ago, the conservative government found a way of nicking more money off us to help pay for our membership of Europe

Before Europe it was called Purchase tax, but on entry to the "Common Market" Ted Heath applied VAT

If my memory serves....