If my supplier - either goods or services or both - supplies me goods/services and they are exempt from VAT due to the fact the suppliers total turnover is less than £77k pa and I sell their goods/services on to a customer can I account for the VAT on the VALUE ADDED ONLY?
EG - I employ a carpenter to make a cabinet for my customer. The carpenter is not VAT registered and charges me £1,000.
I am VAT registered and sell the cabinet for £1,500 plus VAT to my customer
Is my VAT - £300 being £1,500 x 20%
Is my VAT - £100 being £1,500 less £1,000 cost - ie £500 x 20% - ie VAT on the VALUE ADDED
I have a lot of business like this and currently account for the VAT at the £300 level.
Also I am after the relevant legislation reference if anyone point me to the legislation as well
This query does not relate to Margin Scheme on second hand goods/antiques etc - I understand this scheme.
This query does not relate to Imports from EU countries etc - I understand VAT in these instances.
Thanks in advance for any help