Cash accounting is an accounting method where transactions are recorded only when cash is received or paid. This system differs significantly from accrual accounting, which records transactions when they are earned or incurred. Cash accounting provides a simplified approach to managing VAT liabilities for eligible businesses.
Default in the context of accounting refers to the failure to fulfill a contractual or other legal obligation, including settling debts, defending legal proceedings, or submitting and paying Value Added Tax (VAT) on time.
Deregistration refers to the process by which an entity ceases to be registered for Value Added Tax (VAT). This often occurs when a taxable person stops making taxable supplies, making deregistration compulsory, with a notification requirement within 30 days.
Input tax is the Value Added Tax (VAT) paid by a taxable person when purchasing goods or services from a VAT-registered trader. It is used to offset the output tax to determine the final VAT payable to tax authorities.
Partial exemption in VAT refers to limitations imposed by tax legislation on the input tax a taxable person can claim when they make a mix of taxable and exempt supplies.
A registered trader is a taxable person who has complied with the registration for value added tax (VAT) regulations. This compliance allows them to charge VAT on taxable supplies and reclaim any VAT they have paid on their purchases.
A detailed value added tax (VAT) invoice provided by a taxable person to another taxable person when a taxable supply exceeds £100, containing essential transaction and tax information.
A taxable person includes individuals, partnerships, limited companies, clubs, associations, or charities as defined by value-added tax (VAT) legislation. These entities are responsible for charging VAT on taxable supplies made in the course of conducting their business.
Registration for value-added tax (VAT) by a taxable person whose taxable turnover does not exceed the registration threshold. This option allows businesses to benefit from claiming input tax credits even if their revenue—taxable turnover—does not mandate compulsory VAT registration.
