Merchants, VAT was never yours
I read a report in the newspapers where a news team went on a fact-finding mission to some supermarkets to see the response to the value-added tax (VAT) removal.
From the answers given I think merchants either don't know how VAT is recorded in the accounts of a business, or they are deliberately misappropriating government money and misreporting VAT, although VAT has been around for years.
Merchants are "Revenue Collecting Agents" of the government in the same way an employer deducts PAYE, Health Surcharge, and NIS. The difference is that merchants are allowed to set off "VAT Collected" against "VAT Paid" and submit returns after 11 weeks. This money is to be accounted for separately from "Purchases" and "Sales".
In accounting terminology VAT is a "Balance Sheet" item and not an "Income and Expense" item.
Therefore, the excuses given that: "we pay VAT on it already";
"We have to wait until we get new stocks"; "We need more time", etc make no sense,
because of the "set off" feature of the VAT system, so that if you paid VAT on an item and it is now "VAT-free", the merchant will get a refund on his VAT when the VAT return is made up, but if you treat it as part of your sales figure, you will think you are losing money, but VAT was never yours.
Please be informed.