A general concept of VAT is that a ‘taxable person’:

1charges VAT on the positive-rated supplies that he makes. This is his ‘output tax’ (VATA 1994, s. 24(2)); and

2pays VAT on the positive-rated supplies that he receives. This is his ‘input tax’ (VATA 1994, s. 24(1)); and

3at the end of each prescribed accounting period accounts to HMRC for the difference between the output tax and the input tax (VATA 1994, s. 25(1)–(3)).

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