VAT Implications

Gross & Net Amounts

  • Gross Amount: an item's price including VAT (the price displayed on products in all high street shops in the UK includes VAT)
  • Net Amount: the price excluding VAT

The relationship between gross and net amounts is demonstrated in the example below:

Net (Gross/1.2) £100.00 

20% VAT (Gross*0.2/1.2) £20.00

You Pay (Gross) £120.00

Different rates of VAT apply to different products – you should always ask for a receipt showing clearly the VAT rates and amounts charged if the supplier is VAT registered.

 

Brief explanation on VAT implication

The fundamental principle with VAT is that if you pay VAT on your income, then you can reclaim VAT on any associated expenditure.

As sport spectating is not exempt from VAT you will have been charged VAT on the original purchase of the tickets, which is then reclaimed. This is therefore a saving which is balanced out with the VAT paid on the onward sale. So if for argument’s sake the tickets were £120 and you sold them on at the same price:

 BudgetVAT
Purchase- £100-£20 reclaimed
Sale£100£20 paid
Total£0£0

The only exception to this would be if we were not able to reclaim VAT on the original purchase because the supplier is not VAT registered, is exempt from VAT for other reasons or did not provide the correct documentation.

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