Reply to post: Re: Tax loss for HMRC

Re: Tax loss for HMRC

No, you don't remove the VAT from the figures, it is paid by the company and you collect it and give to the government... That is VAT income you have generated, NOT the client.

Let me explain it in a way I would to my 4 year old...

I buy a wooden pole for £12 (£10 plus £2 VAT)

I paint it, I sell it to a client for £24 (£20 plus £4 VAT), I generated £2 VAT for the government

my client sells it to a consumer for £36 (£30 plus £6 VAT) They generated £2 VAT for the government

So you see the VAT is generated and paid by every step in the supply chain, you just end up paying your VAT by excluding the VAT you already paid. Its very simple to understand