facts about vat

10 Surprising Facts About VAT You Need to Know!

Although VAT was initially intended to be a "simple tax," it has subsequently developed into a system that has been compared to a "fiscal amusement park where factual and legal realities are suspended and inverted." This blog discusses some significant facts about VAT that you may not be familiar with.

10 Interesting Facts About VAT

  1. Do you want to bet on football or buy a new helicopter? Some people might be surprised to learn that both purchases are VAT-free. Airships, specific sizes of caravans, civil airplanes, houseboats, military airplanes, and ships weighing 15 tonnes or more are additional vehicles covered by the 0% VAT rate. Additionally VAT-free are bingo, lottery ticket sales, and online lottery games.
  2. E-books and other digital publications are regarded as taxable supplies in the UK and are charged VAT at the regular rate of 20% even though physical publications like books and newspapers are exempt. This is so because electronic books are viewed as services rather than tangible goods, and the provision of services is typically liable to VAT. However, depending on the particular circumstances and the unique VAT rules in each nation, the treatment of digital publications with regard to VAT may differ.
  3. After income tax and national insurance, VAT is the third-largest source of government revenue, bringing in £125.3 billion in 2017–18. Even while your biscuits might cost a little more to buy and there might be a little less money for candy in the budget, everything helps to support the maintenance of the nation's services.
  4. While caviar, lap dances, and labrador food are not considered "luxuries," orange squash, gasoline, ice cream, and poodle food are.
  5. The Jaffa cake controversy centered on the question of whether Jaffa cakes should be classified as cakes or biscuits for tax purposes. While the tax authorities contended that Jaffa cakes should be classified as biscuits and subject to VAT, the Jaffa cake manufacturer maintained that they should be classified as cakes and exempt from VAT. In the end, the court ruled that Jaffa cakes qualified as cakes and were therefore VAT-exempt.
  6. Ferrets qualify for the zero-rating of VAT on pet food and other pet-related products and services since they are regarded as pets under UK VAT law. Rabbits, on the other hand, are not regarded as pets under VAT law and as a result, goods and services linked to their care and maintenance are subject to the ordinary VAT rate of 20%.
  7. Honey bees and bumblebees are not subject to VAT in the UK or any other nation. Under the legislation of the majority of nations, including the UK, the supply of live insects, including bees, is normally exempt from VAT. Therefore, beekeepers and other individuals who sell bees, bee-related goods, and bee-related services are not obligated to collect VAT from their customers.
  8. No VAT is applied to the sale of counterfeit goods, whether they are tangible objects or digital ones. Cash that has been counterfeited is also illegal and exempt from VAT. Both counterfeit merchandise and counterfeit money are severe offenses that can lead to fines and criminal penalties. The selling or possession of fake products or money may lead to arrest and legal action. Selling phony designer handbags is one instance of counterfeit goods. Using phony money is one instance of counterfeit money. Both are forbidden and exempt from VAT.
  9. Others, like the UK, have varied VAT rates for different categories of goods and services, just like in the EU, where VAT rates can range from as low as 15% to as high as 27%. Some nations, like New Zealand, have a single VAT rate for all goods and services.
  10. A value-added tax is levied on food in some nations, like Norway, but not on other needs like clothing and medication.

Final Thoughts

We appreciate you taking the time to read this blog post about some amazing and unexpected facts about VAT. We sincerely hope you liked reading about these peculiar and distinctive features of this significant tax and learnt something new. And as always, keep checking back to this website for updates on VAT!.

Rían Doyle

I'm a VAT professional with years of experience helping businesses with compliance and reporting. My goal is to simplify VAT calculation and provide valuable insights through my engaging writing style and clear explanations of complex concepts.