The Complete VAT Jargon-Buster

Value added tax (VAT) jargon can be confusing, leading to unnecessary complications for your business. The Complete VAT Jargon-Buster will allow you to confidently discuss your VAT and understand HMRC’s complex terminology.

We have written the VAT jargon alphabetically so that you can easily find what you need and dip in and out as required.

VAT Jargon A-Z

Some of the common VAT terms, written in plain English (you’re welcome):

Accounting Period – you usually submit a VAT return to HMRC every 3 months, this period is known as your ‘accounting period’.

Acquisitions – goods or services from overseas that you may have bought or acquired.

Corporate Body – a group of people, for example, a limited company, private company or limited liability partnership, being treated as one group by law.

Distance Sales – when a business supplies and delivers goods from one EU country to another.

Exempt Supply – supply of goods or services is an ‘exempt supply’ if no VAT is due by law.

Export – if you sell, supply or transfer goods out of the UK, this is known as exporting.

Dispatches – if you supply goods to another EU country, these are known as despatches.

Imports – if you buy or transfer goods into a country, this is known as importing.

Input Tax – the VAT added to the price when you purchased goods or services that are liable for VAT.

Output Tax – the VAT you charge on your own goods and services to businesses and customers.

Outside the Scope of VAT – goods and services completely outside the scope of VAT altogether, for example, goods or services you bought and used outside of the EU.

Place of Supply – the place where you make a supply of goods or services.

Reduced (VAT) Rate – some essential goods and services are subject to VAT at a reduced rate of 5%, for example, sanitary products or a child’s car seat.

Standard (VAT) Rate – taxable supply subject to the default rate, currently 20%.

Supply – supplying/providing goods or services, usually for sale.

Supply of Goods – a transfer of goods or services by sale.

Taxable Person – a business, sole trader or professional who are required to be VAT registered.

Taxable Supplies – any supply of goods or services by a taxable person, liable for VAT at the standard, reduced or zero rate.

Taxable Turnover – the total value (net of VAT) of taxable supplies made by a person during the year.

Tax Point, or Time of Supply – the date at which VAT becomes chargeable on a transaction (usually when goods change hands during the sale).

Partial Exempt – a VAT registered business falls within the scope of ‘partial exemption’ when it has goods or services of both a taxable and exempt nature.

Zero (VAT) Rate – as the name suggests; goods and services that are subject to a zero (0%) VAT rate, for example, most food and children’s clothing.

M2M Technology is one of the most established and experienced Sage Business Partners in the UK, working with Sage software solutions for over 25 years. We specialise in providing business management solutions that are practical, cost-effective and support your business growth.

To discuss your business needs with one of the team, please get in touch.

To access HMRC’s VAT returns guidance, please click here.