Who pays VAT?

For items which are standard rated or reduced rated for VAT, VAT is charged to the buyer (output tax) by the VAT registered seller. This VAT is reclaimed by the VAT registered buyer (input tax) after goods and services are purchased.

If you are registered for VAT, generally you charge VAT on your business sales and reclaim VAT on your business purchases. The difference between the VAT you charge and the VAT you are reclaiming is the amount of VAT you must pay. If the value of the VAT you reclaim is more than the value of the VAT you charge, you can ask for a refund.

VAT can be charged to a buyer by a VAT registered seller. This VAT is reclaimed by a VAT registered buyer after goods and services are purchased. VAT is levied on the added value that results from each exchange. A VAT is an indirect tax, in that the tax is collected from someone who does not bear the entire cost of the tax.