Value added tax (VAT) is a tax on transactions, rather than a tax on profits, except for users of the second-hand goods scheme or the tour operators’ margin scheme.

VAT was introduced in the UK on 1 April 1973, i.e. shortly after the UK joined the European Economic Community (EEC), which is now usually known as the European Union (EU). VAT is the common tax of the EU and is intended (eventually) to apply in the same way in each member state.

Before 1 January 2021 UK national VAT law was required to comply with the requirements of European law, principally the Primary VAT Directive, Directive 2006/112, as a condition of the UK’s membership of the EU.

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