Who can use it
You can only use this scheme if you buy goods for resale.
You can’t use apportionment if you provide:
- goods that you’ve made or grown yourself
- catering services
Your turnover, excluding VAT, can’t be more than £1 million a year.
There is a separate scheme for businesses with a turnover of between £1 and £130 million.
How to calculate your VAT
Calculate the total value of goods purchased for resale in the VAT period for each VAT rate.
Divide the total of purchases for each VAT rate by the total for all purchases.
Multiply the outcome by your total sales, divided by 6 for 20% rated goods, and divided by 21 for 5% rated goods.
In the VAT period you buy goods at the following VAT rates:
- £16,000 of goods at 20%
- £1,000 at 5%
- £10,000 at zero rate
Total purchases: £27,000
Your total sales are £34,000.
(£16,000 / £27,000) x £34,000 / 6 = £3,358.02
( £1,000 / £27,000) x £34,000 / 21 = £59.96
Total VAT for the period = £3,417.98