VAT criticisms?

It seems that some tradesmen can avoid charging you VAT on their services perfectly legally by keeping their turnover (I think) under £77kpa. They do this by getting you to buy the raw materials yourself (in the case of a builder) and only charging you for their labour etc, to stay under the threshold. Obviously you have to pay VAT on those materials you buy yourself but don't have to pay the builder VAT on top of their payment. I've not used that arrangement myself but I understand it's not uncommon and is perfectly respectable.

Murray

Not VAT related, but more general tax comment. I heard the following last week went talking about the super rich paying fair tax. Would you rather own a Ferrari and drive it on an unmaintained road or own a Porsche and drive it on a smooth road. Interesting analogy I thought.

Buying materials yourself avoids being overcharged for them by the tradesman who may just quote some random amount for materials, but at the same time not everyone has access to trade prices on building materials.

The difference in prices between say Wickes (anyone) and Selco (trade only builders merchants) can be quite significant on things like plaster, plasterboard, bricks, cement, etc, even after adding the VAT on the Selco prices, less so on some other items.

Many trades people do their best to avoid VAT and Income Tax by doing as many jobs as they can for cash and only declaring what they think they can get away with.

I'm paying in a traceable way, so I can be fairly certain the VAT will be declared. As ever though, the commercial arrangement with a builder is an ongoing game - cost of goods, what was quoted, variations in scope etc. Mind you, as a former consultant myself, I know about that game from the other side of the fence.

Local builders here order the materials and leave you to pay the invoice.. a bizarre but useful system where they get it ordered trade and invoiced in your name to pay direct to supplier.

When my 2 business were active. I had about 60 active customers & over 300/400 invoices per quarter.( Bear in mind they were in construction & involved a lot of alteration retentions etc not just simple invoices) It took about 20 minutes to prepare my VAT return & about the same to ensure that I had correctly posted them on the HMRC website for each company- staggered 1 month apart

If you took 2 days then i would suggest that you were leaving your accounts to the last minute or were very disorganised.The infrequent visits from the VAT inspector were never a problem if books were kept in order. I have never had any major problems with VAT & visits have never lasted more than a day every 4-5 years or so. I now only have one company & work as a consultant . The last inspection was 9 years ago & lasted 2 hours.

I like VAT as a tax , not so much as for the fact that I have to pay it, but for the fact that it is by far the easiest tax for me to operate & by far the easiest for the HMRC to collect. If it was not for the fact that it tends to be a greater proportion of the poorer persons income ( because they have to spend all there income & have none spare in comparison to the wealthy who do not have to spend all their cash so the statistics are distorted ) I would rather they increased VAT & did away with PAYE & the hassle & work that creates. Collecting tax from wages really is a full time job. If there was a way for the current non tax payer to reclaim VAT it would be great to pay more VAT & not income tax. It would save fortunes in unnecessary bureaucracy

They should abolish all current taxes and bring back the Hearth Tax and Window Tax.

My workshop has neither!

Satchll

Some think they are hard done to.

Do you realise that today I have had to spend nearly 5 months Old Age Pension to buy a new fork lift truck.

How does this government expect anyone of frail circumstances to work without a fork lift truck.

Did get one pleasant surprise though in that the batteries out of the old truck weighed in at 500 kg.

The VAT threshold of 83k is very useful for the little guy but you need to watch for traps

If you sell a digital download for 1p to an EU customer then you have to register your business for VAT (eservices rules)

And there you have it.. entirely different businesses. I had a database of some 30K clients with some 3K unique ones seen every year but some 10K+ invoices and many hundreds of different products and services stocked. Yes it was all computerised and output tax was a press of a button...although it still needed some cross-check. Input taxes and spreadsheet checks were the majority time... making sure I was claiming all those inputs. Every few years we got visited and it always took the full day.

So in the grand scheme of things the 2 days doing the VAT with the 1 days visit were proportionally minimal -compared with everything else- & not the burden that you suggested. Although a pain in the butt when busy !!!!!

Does that mean you can lift your wallet back up onto the bench now?

Neil

No, It's to lift the bench back onto the wallet.

Regards Ian.