What tends to be forgotten here within the VAT supply chain is the large amounts of monies that are available to the Government that are 'washing through' the VAT system. Some companies pay VAT, others reclaim VAT, however with the timing differences there are always huge amounts of money within the VAT system at any point in time available to the Government. No Chancellor is going to be willing to lose this...
In the scenrio described, the cost to you of the cabinet is £1000; if your supplier was VAT registered the cost to you would have been £1000 +£200 VAT - £1200. As you are VAT registered you would have reclaimed this £200 VAT, making the cost to you £1000.
When you sell the cabinet for £1500 + £300 VAT, the customer pays the final amount of VAT due on this supply - ie. £300.
In this case, you have not been required to pay and account for £200 on the purchase of the cabinet and the final customer pays you the £300 VAT due on the sale. The £300 is payable on the VAT return meaning that you are not out of pocket.
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..VAT silly question
What tends to be forgotten here within the VAT supply chain is the large amounts of monies that are available to the Government that are 'washing through' the VAT system. Some companies pay VAT, others reclaim VAT, however with the timing differences there are always huge amounts of money within the VAT system at any point in time available to the Government. No Chancellor is going to be willing to lose this...
In the scenrio described, the cost to you of the cabinet is £1000; if your supplier was VAT registered the cost to you would have been £1000 +£200 VAT - £1200. As you are VAT registered you would have reclaimed this £200 VAT, making the cost to you £1000.
When you sell the cabinet for £1500 + £300 VAT, the customer pays the final amount of VAT due on this supply - ie. £300.
In this case, you have not been required to pay and account for £200 on the purchase of the cabinet and the final customer pays you the £300 VAT due on the sale. The £300 is payable on the VAT return meaning that you are not out of pocket.