Standard rated supplies from EU

Hello JillY,

For the following question why the supplies has output Vat even though there is no sale?

please the point of making 0 Vat.

Thanks,
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Q:

A UK VAT registered trader making only standard rated supplies purchased goods worth 10,000 (VAT exclusive) from a VAT registered trading situated elsewhere within the European Union.

The goods would be classes as standard rated if they were supplied in the UK.

The standard rate in the EU country the goods are supplied from is 5%.

What is the net effect on the VAT position of the UK trader?

a) o
B ) 2,000 to pay to HMRC

Answer is
A) 0

Explanation
The UK trader accounts for output VAT of 2,000 as the goods would be standard rated if supplied in the UK.

The UK trader can claim back input VAT of 2,000 on the same return as the goods are used by a trader that only makes taxable supplied.

The net effect on VAT payable is therefore nil.