Zero-rated supply (UK VAT)
A zero-rated supply is a taxable supply at the zero rate, so no output VAT is added to the selling price. It differs from an exempt supply: eligible related input VAT may be recoverable by a registered business under the applicable rules. The classification of a particular supply and registration position depend on its facts and the relevant tax period.
Worked example
A registered business makes a qualifying zero-rated sale of 1,000. Output VAT on that sale is zero; related input VAT is considered under the recovery rules.
Common mistake
Treating zero-rated supplies as exempt or assuming zero output VAT automatically prevents input VAT recovery.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | TX (UK) | Direct | June 2026–June 2027 |