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Archive for February, 2010

What is Meant by Input Tax and Output Tax re: VAT

Friday, February 12th, 2010

Input Tax 

Input tax applies when a company buys goods or services from another supplier.  VAT is added to the purchase price - this is called input tax.

Output Tax

Output tax applies when a company sells its own goods or services. The VAT that is added to the price is called output tax.

The difference between output tax and input tax is payable to HM Customs and Excise. If input tax is greater than output tax, a refund can be claimed from HM Customs and Excise.

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