Can anyone explain how VAT on acquisition works.We have bought goods from a VAT registered business in EU Member State which are 'zero-rated' due to a single market rule.Now we have to account for the VAT on the goods which we have acquired,thus e.g. we are buying computers from German for £100(no VAT) and now we have to add 20% VAT on the computers?Or if not,then how does it work?I would be very grateful for any help as our company has no experience in such transactions whatsoever.Thx
The nominal VAT on acquisition is £100 x 20% = £20. This is your output tax, and is included in Box 2 of your Return. If you are able to claim VAT, then the same sum is also included in the Box 4 total. The end result is 'a lemon,' as we say in the trade! (There are several situations in which the taxpayer cannot recover the VAT as input tax, so there is a cost for his acquisition.) You also need to show the value £100, in Box 9 of your Return.
