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If you are registered for VAT, you must charge VAT on all VAT taxable supplies of goods and services that you make. 'Supplies' include day-to-day sales as well as anything else that you sell or invoice for, such as assets and commission, and anything else you supply or take out of the business even if you don't charge for it, such as loans, gifts and anything used privately. There are some exceptions.
VAT is payable on the full value of any supplies made, even if no VAT
was charged to the person or business who received the goods or services.
If you receive goods or services as full or part payment, you must account for VAT on the full value of the item sold, rather than the amount that you charged the buyer.
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If you are registered for VAT, you must charge VAT on all supplies of goods and services that you make within the UK, at the appropriate rate, unless they are specifically either exempt from VAT or outside the scope of UK VAT.
In addition to charging VAT on the goods and services that you supply to your customers, you must account for and pay VAT on:
VAT is also chargeable on:
You do not have to account for, or pay VAT on the following.
If you give free samples of your goods to another person or business you don't have to charge VAT as long as you give them for marketing purposes. Your samples must be given to promote sales by demonstrating the product and provided in quantities consistent with that purpose.
So, for example, you would not have to charge VAT on a small glass of wine given to a customer to try in a restaurant, whereas a full bottle would amount to more than marketing - because of the quantity involved - and you would have to charge VAT. You would also have to charge VAT where you provide something from a discontinued range, as there is no product to promote.
If you make free loans of business assets to your customers then you don't have to charge VAT on the loan as long as the cost of hiring the asset is included in the price of something else you sell to your customers. For example, where you sell tea, coffee, water etc and you provide for 'free' a vending machine for these items and none of your customers pays extra for the machine.
You do not have to account for VAT on business gifts made to the same person where the total cost of all the gifts does not exceed £50 in any 12-month period.
You don't have to account for VAT on genuinely free services that you provide. You must not receive any payment, goods or services in return.
Supplies at different rates of VAT are sometimes called 'mixed supplies'. This is where you charge a single price for a number of separate supplies of goods or services but one or all of them are at different VAT rates.
You need to work out the value of each supply you make at each different VAT rate to see how much VAT you need to charge. If the VAT value is based on the total price that you charge your customer, you need to split that price between each supply - this is called 'apportionment'.
There isn't a special way to do apportionment unless you are using the Tour Operators Margin Scheme where you have to use the method explained in VAT Notice 709/5. Your calculations must be fair and you will need to be able to explain them if HMRC visits or contacts you. There are different ways to do apportionment, and although you can use your own method, there are examples in VAT Notice 700, The VAT Guide.