I retail used goods and so operate under the VAT margin scheme. Therefore I pay VAT on the margin between the purchase and sale price of my items.
My question is, when calculating my profit for income tax purposes, should the VAT that I have collected and paid to HMRC each quarter on those margins, be deducted from my profits?
It doesn't seem right that I would pay income tax on VAT I've collected for the government, but I'm not sure as I cannot find an answer anywhere.
Thanks for any help.