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Definition
Output VAT is the VAT you charge on the goods and services you sell. You collect it from customers and hold it on HMRC's behalf until your VAT return, when you pay it over minus the input VAT you reclaim.
In plain terms
It looks like extra revenue in your bank account, but it is not yours. Treating output VAT as spendable cash is a classic way to get caught short at quarter end.
Why it matters for your company
Ring-fence output VAT as it comes in so the bill never surprises you. See understanding your VAT bill.
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Input VAT
Input VAT is the VAT your business pays on its purchases, which you can usually reclaim, reducing the VAT…
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