VAT – INPUT And OUTPUT Tax
UK VAT registered businesses are required to account for VAT each quarter. Businesses are able to offset the sums they receive in from the sum they pay out. They are accountable to HMRC for the difference.
Input tax is the VAT you pay to your supplier on the purchase of goods or services supplied to your business.
Output tax is the VAT you charge your customers on the sale of your goods or services to your customers.
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Where a business received more VAT from their sales (output tax) than they paid to their suppliers (input tax), that difference must be paid to HMRC.
Where a business paid more VAT to their suppliers (input tax) than they received from their customers in sales (output tax), that business is usually able to claim the difference back from HMRC.
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