We have just had to register. What a minefield Does anyone understand why or how? Wouldn't it be better to scrap it and put income tax up?

I reckon it would be sensible - and possible- for the government to set VAT to 5%. It would be an awful lot easier, less people would avoid paying it ("10 quid for cash, mate"), etc. And it should be payable on EVERYTHING. No silly exclusions for cakes but not biscuits etc. Less people would be paid by the government to sort through all this unnecessarily complicated tax system, which would make the tax bill less.

The labour government goes completely against logic.

It's not the actual rate that is the problem, but the merrygoround of money. I can't believe how complex it is and I don't believe anyone understands it. We've had conflicting advice off the revenue people.

PS would that it was just down to the government. It's right across Europe and was also administered when the real tories were in power.

Hmmm VAT a subject dear to my heart!for sure if your a small business on the border line threashold of the VAT turnover limit you'de be better off keeping below the threashold and avoiding the tax unless of couse you have aspirations of growing the business and selling it on, but just to give an example, many years ago shortly after VAT came in to being Ester Ranson who had a show who's name escapes me (it was similar to today's watchdog)did an analogy of VAT transactions during a products life cycle it started in the Amazon rain forest with tree felling, i can't remember all the transactions but there were about ten from felling the tree to saw mills to pulping to importing anyway the bottom line was that after 10 transactions of input/output tax utimatly the iten ended up as a brown paper bag on a market stall and the guy gave it away. You don't say what kind of business you have but under certain circumstances there's also the Deminimus Rules relating to VAT this can mean you don't have to pass the turnover threashold to be liable

If this makes sense, we are a sole trader, well my OH is anyway. Mainly books, but also vatable posters and placemats. Retail and Trade. Opinions on what we should do? Everyone has one!!

quote:

Originally posted by tigerwuds:
Hmmm VAT a subject dear to my heart!for sure if your a small business on the border line threashold of the VAT turnover limit you'de be better off keeping below the threashold and avoiding the tax unless of couse you have aspirations of growing the business and selling it on, but just to give an example, many years ago shortly after VAT came in to being Ester Ranson who had a show who's name escapes me (it was similar to today's watchdog)did an analogy of VAT transactions during a products life cycle it started in the Amazon rain forest with tree felling, i can't remember all the transactions but there were about ten from felling the tree to saw mills to pulping to importing anyway the bottom line was that after 10 transactions of input/output tax utimatly the iten ended up as a brown paper bag on a market stall and the guy gave it away. You don't say what kind of business you have but under certain circumstances there's also the Deminimus Rules relating to VAT this can mean you don't have to pass the turnover threashold to be liable

I used to work in Customs&Excise and I don't even understand VAT properly
You see it has the basic brackets whic are easy enought to understand but then it contradicts itself so much such as you do not pay tax on underwear as they are a basic living commodity but you pay the full 17.5% on whats deemed to be sexy underwear, you only pay the 5% on clothes unless they have a brand name on them then its the 17.5% again.

You don't pay VAT on cake because it is a casic foodstuff but if you order it in a restaraunt then you paty tax on the service.

Ps you probably know that McVities took HM Customs&Excise to court for millions over the definition of Jaffa Cakes.

The reason I Quoted the guy above is because I actually worked in the Insolvency dept. and it was sad to see how many people go bankrupt or companies are wound up because they didn't know that they were supposed to pay VAT. If the government are going to be so harsh on these people they should make the rules easier to understand.

And as for this quote above
"The labour government goes completely against logic"
That is just cheaky because it was maggie thatcher, milk snatcher who implemented VAT which is the next best thing to a tax on air. How people have short memories!
Personally I don't vote anymore as I am disillusianed with the whole system atm.

Hey Dave, i agree but complication causes confusion and that's what this Goverment like, they run the country under the Three M's principal, Measure, Monitor and Manipulate, the manipulation of figures allows them to bamboozle the populus into thinking that things are different to what they rearly are, getting back to topic, i agree the system as developed some crazy requirements, take away food comes to mind, can't remember the datail but it's some thing like if it's hot you pay but if it's cold you don't WHAT!!!!! madness personified

I find the problem is that people have selective memories. Maggie Thatcher country rescuer may not have such a good ring to it but it is much closer to the truth.

Now hold on there. I did not want to start a political argument over this. Although, for the record, that Thatcher one absolutely ruined the area I live in, what with her crackpot market economy theory and all. (Unless one deals in drugs)

Discodave - I was working in an accounts department when VAT was introduced and we found that any time we rang up to ask whether or not something was VATable we got different answers! We did however build up a good relationship with the VAT team and they were really helpful. It was a great help to know we were all in the same boat.

I was going to suggest that the person who asked the question should try going in for a meeting - any use?

As I was the mug responsible for getting the returns in on time I do seem to remember deadlines were not flexible. Has that changed?

No longer in accounts but some memories remain clear.

VAT is a nightmare, but the Govt likes it because businesses do all the work in calculating the tax and simply send a cheque to revenues. VAT is actually the cheapest tax to collect and administer - I think only about 3% of receiits are spent by the Govt collecting the money.

For the political record - VAT traces its origins back to the Treaty of Rome in 1957. The EC 6th directive brought about a system for a harmonised turnover tax throughout the European Union. In the UK its introduction was first anticipated in statute as far back as 1968, under the Wilson Labour Government. It was first introduced as a tax in the UK on 1 January 1973 on the UK's accession to the EU, under the Heath Conservative Government. However, it replaced the even more arcane purchase taxes of the time. The complication of the tax is in part due to the political imperitive of successive governments of removing from the full charge what they see as the necessities of life. Some activities are exempt, such as banking and insurance, which generally means that the tax is utlimately borne by the banks and insurance companies who pass it on to the consumers in higher charges. Some goods and services are zero-rated, such as public transport or books and newspapers, where the cost of the tax is not passed on to the consumer, some are taxed at 5%, such as domestic energy, with all the rest at 17.5%. It would be simpler if all goods and services were taxed at one rate, but as this would have to be at a rate not out of line with the standard rates charged across the EU (and 17.5% is at the bottom end of the range of rates) this would not be politically popular. The complication then comes in determining how to tax goods and services in the grey areas between the different rate bands - such as Jaffa Cakes - are they biscuits (necessities = zero rate) or cakes (luxuries = standard rate)?

Thanks to the EU our elected government's chancellor no longer had full control over VAT.
In fact, our elected government has very little control over many things that just drift in from the EU.

quote:

Originally posted by CROSSTOWN TRAFIC:
Now hold on there. I did not want to start a political argument over this. Although, for the record, that Thatcher one absolutely ruined the area I live in, what with her crackpot market economy theory and all. (Unless one deals in drugs)

Well, I doubt you'd be able to see very much of your town if the lights were only on for 3 days a week!

I think there is a bit of an agenda here from anythingbut... Whilst it may be right to hold the EU responsible for VAT in the first place it is our own fault for the complexity of the tax in the UK. The EC 6th directive, like most EU directives, is a model of brevity. What happens, as with all other directives, is that the anally-fixated UK legislators and administrators take a directive and turn it into gold-plated law with mind-bending complexity, and then continually meddle with that law year on year. In some of the newer EU countries VAT law can be written on a single A4 sheet - everything is taxed at a single rate. Speaking to certain French people, they are amazed at the British attitude to the EU - we oppose like mad the introduction of each directive, but when the directive becomes law, we rigidly impose and enforce every nuance. The French aren't so bothered by directives and will only observe those ones that they find convenient and ignore all the rest.

A message for Crosstown - Thatcher did not invent the market economy and it functions regardless of her and any other government. I live in one of those "Thatcher-blighted" areas, but the lesson is not that the market economy has failed, it is that if you rely on governments to bail you out they will always let you down. The problem is that large parts of the country still would rather place their trust in governments. I think a recent survey found that in the years 1971 to 2001, despite 30 years of government regional policy and many billions of taxpayers money spent, the regions that were favoured by regional assistance had managed to create on a net basis 10,000 new jobs; whereas the regions that had been discriminated against by the government had created, over the same 30 year period, a net 2.7 million new jobs. Who says the market economy is crackpot?

quote:

Originally posted by daveyjp:
VAT is a nightmare, but the Govt likes it because businesses do all the work in calculating the tax and simply send a cheque to revenues. VAT is actually the cheapest tax to collect and administer - I think only about 3% of receiits are spent by the Govt collecting the money.

Thats it, the government takes the money of you in the first place and not only that but makes you do all the work and then you get severly punished if you fail too.

The deadline is flexible now but not enough, I mean if you were suposed to be paying vat because you were just over the boundry and you weren't then HM Revenue and Customs will give you time to pay the deficit but that can be into 100'000 before you actually realise you should have payed V.A.T and obiously if you cant catch up your company will be wound up or even worse if you are not a limited company then you can be made bankrupt your house and goods sold off for a fraction of the cost and still face jail, all because you do not understand what people who are paid to do the job cannot comprehend!

Now for somthing completly different, How did Maggie Thatcher save this country anythingbutchardonnay and if you say the falklands my reply will be this ROFLMFAO

She took the country back from the unions, no more 3 day weeks, privatised companies, etc etc.

I'm disappointed to see this board flooded with so many champagne socialists...

No what she did was to take away unions from people who neded them such as the Firemen and paramedics and police who put their lives on the line for rediculous pay, and not only that she made it illegal for other unions to go on sympathy strikes so we would not be without these much needed services and therein she exorcised the most basic tactic of all divide and conquer so now if these services want a pay rise they have to strike themselves and the public don't like that!

quote:

Originally posted by anythingbutchardonnay:
She took the country back from the unions, no more 3 day weeks, privatised companies, etc etc.

I'm disappointed to see this board flooded with so many champagne socialists...

I don't understand whats wrong with liking an occasional bottle of champagne
I think the point is that our areas are full of social problems due to the demise of old industry. Any new jobs tend to be of the minimum wage variety. Crap managers, aggressive HR departments. No dignity left. It's the social cost. etc. etc.
Don't get me wrong, the current Thatcherite administration have enabled us to go into biz but not everyone is capable of doing that.

Dave- I see it is pointless me arguing about this with you. If you think it's OK for people to walk out whenever they want and let it have a dire effect on the country, then it's an uphill battle me trying to change your opinion.

Cross- Britain was the first country into industry, we're the first country out. Most of us are in the service industry now (thus the profit from invisible exports being far greater than the profit from physical exports).
I bet your average minimum wage job now is much better than salary of old industry jobs. Jobs that you truely had to earn your cash for.
Managers and general bureaucrats are a labour invention, a way of lowering unemployment rates at the cost of the taxpayer. You really can't blame Maggie for that.

I think it's difficult to look at the issues of my area in a purely economic way. Multi disciplinary analysis required. The point is that several large employers had in excess of 15k employees each. This led to a village system rather like Rowntree's if you are familiar.
Self policing areas with lots of provided amenities. As those have colapsed, and drugs have arrived we find ourselves in an almost anarchy of intoxication and violence.
The only things we miss are chemical diseases