The most complicated tax….EVER
Author: Russell SmithJune 26, 2012
Becoming VAT registered is a special day for most businesses. When I say, special, I mean special in a bad way. You have to put your prices up to include the VAT even though it doesn’t benefit the business and you have a whole new layer of administration and accounts work to do just to comply with HM Revenue & Customs. To top it all off, the VAT departments are traditionally the most unfriendly and aggressive tax departments (in my humble experience!).
This would all be fine if VAT was fairly simple but it actually is far from it. Its fun being an accountant because you know that people will always need your services but it must be extraordinarily fun being a VAT specialist (I know some – they’re great!) since nobody in their right mind claims to know everything about VAT.
The thing about VAT is that it doesn’t really follow much logic. You’ve probably heard the old joke (which I have to admit I do say Brent-style) – “never assume, it makes an ass out of you and me”, well – never assume anything about VAT. If there is VAT on one of your products don’t assume that another product follows the treatment. If you can claim VAT on an expense, never assume that you can for another type of expense.
If you are lucky enough to work in an industry or business sector that has some real VAT complication (and believe me, we have some clients with VAT complications that would make your hair stand on end) then a decent accountant and VAT specialist is essential.
The one good thing about VAT is that at least it hasn’t changed recently although at some point in this parliament I would expect it to maybe to go back to 17.5%. Any joy you may have on the sales side (i.e. making it easier to sell) could be cancelled out with the increased administration.
I got so excited about this blog post today that I’m going to blog more about VAT tomorrow – be afraid, be very afraid!