POD model - Add tax paid to total?

Hi - this is probably a simple question, but I'd rather get it right. My business is based on a print on demand/dropshipping model - I pay for each item first. So when doing my expenditures, do I add the VAT I paid on the item as well? Or just the actual item cost? This goes for state tax in the US too; do I add that to the total, or minus it? Just to clarify - I sell an item in my store for £20. I buy that item for £3.72, but with VAT it's £4.41 - which number do I declare? Any help would be much appreciated.

Hi,

If you have a gross turnover of less than £85000, then the VAT on the cost of the item you purchased is part of the expense of acquiring the product and is included as part of the acquisition cost.  

When you sell the product on, including VAT, the disposal value including VAT is declared as part of your gross turnover. The VAT included as part of the selling price, is claimed as an allowable busines expense. You can see guidance here:

HS222 How to calculate your taxable profits (2023)

Thank you.