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Anorak | VAT Fraud And A Tax Bomb

VAT Fraud And A Tax Bomb

by | 26th, November 2008

IT’S always nice to see the faint glimmerings of comprehension in the old media when it comes to justifying their massive expenditure on business and financial journalists, but I’m disappointed in so many of them missing the blindingly obvious on the 2.5 % VAT reduction.

Few, if any, appear to have noticed that the reduction does not require every business to recalculate every price; this is not the place to dwell upon the joys of input and output, but every business in the country could keep its prices to retail customers just as they are, perfectly legally. All it has to do is increase its pre-Vat prices by a small amount.

It does, however, reduce the amount of VAT those businesses would have to pay to the Tax Persons by £12.5 billion. It looks as if the Chancellor, England’s Darling, is using the Nelsonian strategy of turning a blind eye.

He’s also setting up squads of Tax Persons to ease the path of 3.6 million small businesses, who employ 60% of the private sector workforce, to pay tax in manageable installments rather than now, and allowing carry back of losses to offset taxed profits of the previous three years instead of just one. Then there’s the relaxation on business rates on empty property, holding down the small companies’ rate for Corporation Tax, and holding back on the Tax Persons’ bugbear, income-shifting on spouses.

I appreciate that the big picture people have spotted the £3 billion or so in new financing for small businesses, and the plan to fix overdraft pricing for a reliable period, but I still feel they should have engaged the brain a bit on why the Chancellor should have chosen to put £12.5 billion into his Vat magic.

Did they really not grasp that someone who still has a job is a great more likely to be buying that flat-screen television than someone who is on the dole?

– Chenier

The VAT Bomb: 18.5% in 2011



Posted: 26th, November 2008 | In: Money Comment (1) | Follow the Comments on our RSS feed: RSS 2.0 | TrackBack | Permalink