[TW]Fox;15292390 said:
OK, let me just quote what they said...
Meridian said:
No one in the UK is exempt from paying VAT. The only circumstances that I can think of that would give rise to anyone being even close to exempt from paying VAT would be companies under a group VAT registration, in which circumstances intra-group sales are VAT free. I'm not a VAT expert, so I'm prepared for someone to tell me about other classes of VAT exempt purchasers, but I really don't think they'll apply to a small business.
What Meridian may be thinking of is that below a certain threshold (presently £67k turnover per year, if memory serves) a person doesn't need to register for VAT or charge it on their sales. They do, however, still need to pay it on their purchases and under those circumstances they are in fact wholly unable to claim it back.
You can only claim VAT back on business related purchases if you are VAT registered and if the VAT paid is less than the VAT you have charged on your sales to your customers.
That's the reason business to business sales are quoted ex-VAT - because the purchasing business can simply claim back the VAT, so all they care about is the net cost. Furthermore, as VAT is not technically a cost of business, but rather a tax on business, accounts for VAT registered persons are prepared using net figures so that's how costs are quoted.
