Hey there. I'm a dumb Yankee taking my first up-close look at a UK retail business (think restaurants, etc.). How the heck do y'all deal with VAT in a DCF?
My understanding is VAT should be charged on all of these retail sales transactions. So if the company generated GBP 1MM in Q1, VAT is 200K. But it looks like there's some kind of credit for the company's costs: if they buy food, consumables, fixtures, or other non-exempt items., they can reclaim VAT.
This feels a little counter-intuitive. Those suppliers charged my company VAT and pay HMRC 20% of whatever I paid them.
Going through an example: We generate £1,000,000 in revenue. Our VAT liability is £200,000.
We spent $500,000. On that, our suppliers paid £100,000.
Do we somehow get to earn a a credit for that £100,000 in suppliers' VAT, or is that money gone once it hits suppliers? Is this a mechanism the government introduced to limit double-taxation on VAT?
Hey computercomputercomputer, I swear if I had a silver banana for every lonely thread I posted too I'd be richer than @compbanker ...
I hope those threads give you a bit more insight.
Rerum ut sit architecto sapiente enim odio dicta. Velit amet quae omnis. Tempore et reiciendis expedita ullam consequatur nisi quaerat. Facere magnam maxime vitae nostrum. Asperiores itaque vero a et commodi et commodi. Maiores deleniti et possimus optio voluptas perspiciatis sint.
Rerum earum deleniti rerum laborum ut quis. Mollitia animi vel omnis praesentium. Optio est est debitis consequatur placeat.
Est perspiciatis labore neque autem. Quod asperiores a odio dicta aut est. Similique accusamus laborum nesciunt facilis nihil. Aut magnam necessitatibus omnis in enim reiciendis sit. Culpa officia ut optio vitae.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...