VAT criticisms?

[An OtherParticipant @another21905]

NJH – I get the impression that everyone is enjoying themselves moaning about VAT

[Richard S2Participant @richards2]

VAT was, as mentioned, introduced (compulsory) when Britain joined the EEC.

As far as I have read up on it, it is reported to be a Tax Law imposed for being in the Common Market/EEC/EU membership. Legally, it must not be less than 15%, but can be adjusted to account for the costs of collection and payment. It seems to be for all intents and purposes a Membership Fee for being a member.

No EU Member is permitted to reduce it below this 15%, also, the EU decides on what the charge is applied to in the form of goods type, or service. I believe their (EU) plan is to eventually apply it to all goods etc.

Purchase Tax was applied/used post WW2 to assist with Debt repayments for 'Lend Lease' etc. It was 5% in 1958 according to the purchase receipt of an old Atco Mower I now have.

When/how we leave the EU, it can be reduced to below 15%, or even scrapped by the UK Government !!.

I suspect I'll still be paying it in 3 years time.

[Michael GilliganParticipant @michaelgilligan61133]

May I just cross-refer to my recent post on the "What did you do today 2016" thread ?

With luck this should be a **LINK**

http://www.model-engineer.co.uk/forums/sendtofriend.asp?th=113570&p=2105891

MichaelG.

.

Incidentally: Unless things have changed since we started-up, the turnover threshold is not mandatory … you can request VAT registration for even a very small business.

Edit: Just noticed that Neil has already mentioned something similar.

Edited By Michael Gilligan on 14/12/2016 17:41:00

[blowlampParticipant @blowlamp]

There are more fundamental issues with the current system than VAT or income tax, both of which are a form of extortion.

Edited By blowlamp on 14/12/2016 17:29:34

[David Standing 1Participant @davidstanding1]

Posted by Ian Phillips on 14/12/2016 14:57:40:

as a layman I get my knowledge from the BBC

Ian P

And, sadly, we know how shockingly biased the BBC can be .

[Anonymous]

Posted by Neil Wyatt on 14/12/2016 16:31:07:

Small businesses and sole traders can use the fixed rate scheme which lest them claim a fixed percentage instead and is very easy to use.

That's the scheme I use. In theory quite simple, but it didn't stop the chancellor b*ggering about with it in the Autumn statement. Not that I really understood what was fiddled with, but my accountant says it won't affect me. I saw my accountant this morning, and he reckons the chancellor is aiming to make the flat rate scheme less attractive. <redacted as it might be considered political comment> When I was selecting which category to be in I was a bit pee'd off that there is no category for electronics.

You can't claim VAT back in the usual sense under the flat rate scheme, but you pay a fixed percentage of quarterly turnover. There is a caveat to no claiming; you can claim the VAT back for capital items over £2k including VAT. Which is what I did with my 3D printer.

Andrew

[An OtherParticipant @another21905]

I agree that, unfortunately, taxes appear to be necessary, but what is annoying is the apparent illogicality and unfairness which runs through the system. Large companies pay (proportionately) much less tax on large profits, yet people like pensioners get taxed on their income and savings, but have already paid tax on the money paid into their pensions. There are lots of anomalies in the system.

Many attacks have been made on expats (for example) – read the Daily Mail for many examples, but what people forget is that expats paid for their pensions, and (usually) pay tax on their pensions, yet get very few of the benefits from that tax, which people who live in the UK get as a matter of course.

[SillyOldDufferModerator @sillyoldduffer]

The big question is "where's the money going to come from?"

Over the last 7 years or so government debt has risen sharply. It is now about £1.64Tn. (Yes, Trillion, £1,640,000,000,000,000,000 or roughly £27,000 for every man woman and child in the UK)

The Conservative and Labour Parties both pledged before the last General Election that they would return to Surplus by the next parliament. That is government spending would be less than government income, and the need to borrow would be curtailed. (This was not a commitment to settle existing debt.)

Until Brexit, slow progress was being made to bring government borrowing under control. I say slow progress because the then Chancellor of the Exchequer failed to reach any of his own financial targets. They were and are very difficult economic times. Now the Office of Budget Responsibility forecasts that Brexit will require borrowing an additional £59Bn. For this and other reasons the government is still borrowing heavily and it has abandoned it's policy to return to surplus by 2020. A key election pledge is in the dustbin.

Governments borrow because the political consequences of not delivering public services (Health, Defence etc) and paying the bills (Pensions, Interest on Loans etc) are severe. Cuts help balance the books but are unpopular. The Party faithful shriek with pain when it turns out the axe is going to land on them.

Short of a successful aggressive war, there are only three ways of raising more money: heavier taxation, increased GDP, and borrowing. It's very difficult for the Public Sector to lift GDP and continuous heavy borrowing is unsustainable.

It would be delightful to see taxation reduced and made fairer. Most unfortunately, I think this will be extraordinarily difficult to deliver. I'm expecting to see significant cuts in services and increased taxes over the next 10 years. Mr Hammond said in the Budget Statement “As we look ahead to the next parliament, we will need to ensure we tackle the challenges of rising longevity and fiscal sustainability, and so the government will review public spending priorities and other commitments for the next parliament in light of the evolving fiscal position at the next spending review.”

I'm too young to have done National Service. I did spend my youth working for chaps who had. Although they all had funny stories to tell, their opinion to a man was that National Service was almost a complete waste of time. They didn't benefit from it and the military, who much prefer volunteers, certainly didn't.

Dave

[peak4Participant @peak4]

Posted by Andrew Johnston on 14/12/2016 15:49:53:

The VAT system is so complicated that loopholes are inevitable. The more the chancellor tries to plug holes, the more holes he creates elsewhere. At least my VAT returns are relatively simple; but that doesn't stop the chancellor mucking about with them. May be I should invoice him for the time wasted, plus VAT of course!

When VAT was introduced in 1973 the rate was 10%, then it dropped to 8%. And then, in 1975, we had the totally bizarre situation of some electronic components being rated at 8% and some at 25%. It depended upon an arbitrary decision as to whether the component was deemed to be used in industrial (8%) or luxury, ie, consumer goods (25%).

There's no system in existence that a politician can't make worse.

Andrew

Yes I remember it well, even though my better half still insists it never happened, ( and she was a tax advisor before retirement)

I was in the market for a new HiFi amp & pre-amp at the time, as my previous Leak Receiver had lost a channel. I bought a setup from Quantum Electronics in Leicester, which is still in use to this day.

Amp and pre-amp were available at cost + 25% VAT; on the other hand, there was an "Educational Kit", where you bought a box of bits, and ended up with the same final product, but only rated at 8% VAT. Since I then worked for Post Office Telephones, and soldered stuff for a living, guess which one I bought.

I also mended the receiver a couple of months ago, so that's in use again as well. Trouble then was, that the oscilloscope blew up when I turned it on to try and fault the Leak. Ho Hum

[blowlampParticipant @blowlamp]

Posted by SillyOldDuffer on 14/12/2016 17:58:02:

The big question is "where's the money going to come from?"

Over the last 7 years or so government debt has risen sharply. It is now about £1.64Tn. (Yes, Trillion, £1,640,000,000,000,000,000 or roughly £27,000 for every man woman and child in the UK)

The Conservative and Labour Parties both pledged before the last General Election that they would return to Surplus by the next parliament. That is government spending would be less than government income, and the need to borrow would be curtailed. (This was not a commitment to settle existing debt.)

Until Brexit, slow progress was being made to bring government borrowing under control. I say slow progress because the then Chancellor of the Exchequer failed to reach any of his own financial targets. They were and are very difficult economic times. Now the Office of Budget Responsibility forecasts that Brexit will require borrowing an additional £59Bn. For this and other reasons the government is still borrowing heavily and it has abandoned it's policy to return to surplus by 2020. A key election pledge is in the dustbin.

Governments borrow because the political consequences of not delivering public services (Health, Defence etc) and paying the bills (Pensions, Interest on Loans etc) are severe. Cuts help balance the books but are unpopular. The Party faithful shriek with pain when it turns out the axe is going to land on them.

Short of a successful aggressive war, there are only three ways of raising more money: heavier taxation, increased GDP, and borrowing. It's very difficult for the Public Sector to lift GDP and continuous heavy borrowing is unsustainable.

It would be delightful to see taxation reduced and made fairer. Most unfortunately, I think this will be extraordinarily difficult to deliver. I'm expecting to see significant cuts in services and increased taxes over the next 10 years. Mr Hammond said in the Budget Statement “As we look ahead to the next parliament, we will need to ensure we tackle the challenges of rising longevity and fiscal sustainability, and so the government will review public spending priorities and other commitments for the next parliament in light of the evolving fiscal position at the next spending review.”

I'm too young to have done National Service. I did spend my youth working for chaps who had. Although they all had funny stories to tell, their opinion to a man was that National Service was almost a complete waste of time. They didn't benefit from it and the military, who much prefer volunteers, certainly didn't.

Dave

The 'Money', such as it is, is created in the way shown in this video, as and when it suits its creator.

[SillyOldDufferModerator @sillyoldduffer]

Interesting video Blowlamp – those Bankers have a lot to answer for! And I like the idea that politicians will always kick the can down the road because they don't want the financial system to collapse on their watch.

Modern banking was pretty much invented to pay for the Industrial Revolution. It makes you proud to be British. Arghhh!

Dave

[Mark CParticipant @markc]

You lot need to check your spelling, you keep spelling it "banker"

Mark

[Barnaby WildeParticipant @barnabywilde70941]

I think that ME&MEW doing fractional reserve banking & pointing out that our politicians might be liars is a good thing.

However, I doubt there are many Truthers, FMOTL's or Anonymous here, in fact the demographic fits with that portion of the public who the awake perceive as part of the problem.

How many of you are aware & conscious that 'that thing' you made at work yesterday was used to kill a civilian in Yemen today?

[Sam Longley 1Participant @samlongley1]

Posted by SillyOldDuffer on 14/12/2016 17:58:02:

I'm too young to have done National Service. I did spend my youth working for chaps who had. Although they all had funny stories to tell, their opinion to a man was that National Service was almost a complete waste of time. They didn't benefit from it and the military, who much prefer volunteers, certainly didn't.

Dave

Like you i missed the experience

Yet there are those that said that it gave a sense of discipline to youth & i know some who actually used there time to start the learnings of a trade

So although many said that I suspect that many did not actually want to admit that it did do them some good

[Neil WyattModerator @neilwyatt]

Posted by Mick Charity on 14/12/2016 19:21:07:

I think that ME&MEW doing fractional reserve banking & pointing out that our politicians might be liars is a good thing.

Ahem, the view on this forum are NOT those of MyTimeMedia or it's magazines and you will see that all I have done is explain some generally agreed facts about how VAT works.

I'd like people to refrain from getting deeper into politics because (a) there are other forums where you can do that but (b) chiefly because people start saying things that cause offence, create division and seed discord between forum members.

The discussion is heading that way rapidly and it WILL be closed if anyone gets closer to crossing that line.

If anyone want to take the debate to another forum, they can do so and post a link.

Neil

[Sam Longley 1Participant @samlongley1]

Posted by blowlamp on 14/12/2016 18:10:53:

Posted by SillyOldDuffer on 14/12/2016 17:58:02:

The big question is "where's the money going to come from?"

Over the last 7 years or so government debt has risen sharply. It is now about £1.64Tn. (Yes, Trillion, £1,640,000,000,000,000,000 or roughly £27,000 for every man woman and child in the UK)

Hang on ! i thought a trillion was a million million so that is 6 digits plus 6 digits= 12 digits( plus the denominator =13 & you have 19 of them

Then I thought we had 64 million people ( is that right or have I forgotten 3.5 M immigrants ) so 27 * 64 = 1728 * stick 9 noughts on to that( Thousand , million) & we get £1,728,000,000,000.( Now I make that 1.7 trillion)

Is that right ???????

 

Edited By Sam Longley 1 on 14/12/2016 19:58:36

[Michael GilliganParticipant @michaelgilligan61133]

Posted by Sam Longley 1 on 14/12/2016 19:51:00:

Hang on ! i thought a trillion was a million million …

.

It WAS once-upon-a-time, Sam … but it isn't any more

**LINK**

http://www.bbc.co.uk/news/magazine-15478580

Breathe a sigh of relief … The National Debt is much lower than you thought.

MichaelG.

[Michael BriggsParticipant @michaelbriggs82422]

When VAT was introduced in 1973 purchase tax was 25%.

[John Stevenson 1Participant @johnstevenson1]

So VAT was introduced in 1973 and no one has noticed yet that armchairs were included ?

That should affect most on this forum.

[MWParticipant @mw27036]

Posted by Neil Wyatt on 14/12/2016 16:45:29:

Final observation – if there was no VAT, or any other tax was abolished, then the Government would either have to raise another tax or reduce spending. I won't comment on whether or not spoending should go up or down as that's a very political debate.

I will comment on the principle of VAT. It may be flawed but the principle is that 'essentials' like food or newspapers are 'zero rated' whilst 'non-essential goods' are liable for higher rates of VAT. It is therefore a 'progressive' tax in that poor people who spend most of their income on food and accommodation pay less VAT as a proportion of their total spend, compared to the better off who spend a greater proportion of their income on 'luxuries' and therefore more VAT. That this is fair is the consensus across all major political parties and should not be a controversial point to make.

Naturally there are flaws in the system – see the debates about VAT rates for domestic energy and feminine hygiene products which most people would agree are 'essentials' for those who need them.

 

Please keep clear of party politics.

Neil

Edited By Neil Wyatt on 14/12/2016 16:47:01

Hi Neil,

I mentioned earlier that I would prefer a much simpler tax being equally levied on all society rather than an in-out law that appears to favour "more money going to more money" rather than being in key with a socially responsible policy. It might be undesirable to spend our money on tax but i'd feel a lot better about it knowing everyone was in the same boat, we need laws that unite us not division.

It pains me to disagree and to quote Wikipedia but apparently the evidence doesn't stack up for VAT being a socially progressive tool. Research has shown the poor spend twice the bracket of their income on VAT than the top percentile. It would appear to be more taxing on the poor if you believe what the research suggests, there are plenty of citations on this section so it appears to be a well founded claim. See criticisms section.

**LINK**

I relay your concerns about too much venting, although I personally fail to see how party politics could be introduced when the whole parliament seems to have agreed to this without much fanfare or media coverage at the time. They may have also not forseen how widely the exemption claims would go, nor how much the percentile charge would grow.

Michael W

Edited By Michael Walters on 14/12/2016 20:47:47

[MWParticipant @mw27036]

Posted by John Stevenson on 14/12/2016 20:26:00:

So VAT was introduced in 1973 and no one has noticed yet that armchairs were included ?

 

That should affect most on this forum.

Indeed,  a recent family guy episode comes to mind, where peter griffin's workplace, a brewery is taken over by his rich father in law carl pewterschmitt and forces him personally to use a standing desk due to his natural hatred for peter and draconian outlook.

He tells him "Now you must use a standing desk, and you must actively promote it. And tell everyone else about how good it is to use a standing desk. it can't be your personal choice, you being right, mean's everyone else is wrong. From now on, you must refer to everyone else as the chair people and look down on them and tell them that sitting is the biggest killer in America 3 times a day."

Sorry, i'm clearly a big cartoon freak but this did come to mind!

Michael W

Edited By Michael Walters on 14/12/2016 21:10:11

[Sam Longley 1Participant @samlongley1]

As a yachtsman I have a problem in that VAT on red diesel is 5% because it is used for farmers & fishermen etc. marinas generally only sell red diesel. The EU object to yachtsmen having red fuel aboard & in belgium some boaters have been fined for having red fuel as they consider it illegal as they cannot be sure VAT has been paid on it. France will allow us to have red in our tanks on arrival but not in cans for top up. The same in Holland. So because I go to Belgium a lot i have to transport white fuel to my boat & use it all the time to avoid traces of red in my tank.

Currently yachtsmen in the uK can get Vat dispensation for proportion of fuel they claim for heating & battery charging so the bill will show 2 rates of VAT. This really winds the Belgians up. So even showing them receipts to prove VAT has been paid does not mean one will not be fined. So our use of cheaper red diesel ( even though it can be dearer than white diesel abroad) really causes a problem because of VAT rates

[Michael BriggsParticipant @michaelbriggs82422]

Probably because the poor spend all of their income while the better off don't need to hence a reduced vat burden in relation to income.

[MWParticipant @mw27036]

Posted by Michael Briggs on 14/12/2016 21:07:01:

Probably because the poor spend all of their income while the better off don't need to hence a reduced vat burden in relation to income.

The percentage reading would mean that the statistic isn't dependant on the size of their income, it's the proportion that's counted.

It would be clearer to say that this is counted on "the money that is spent" rather than the size of the payees income. Its funny that I have to say that this is in relation to the consumer, when the tax is meant to apply to businesses, not consumers, it just so happens that they decided we should pay it not them, whilst they may happily reclaim their proportion on their expenses. I don't get to claim VAT from my household bill for example.

Michael W

Edited By Michael Walters on 14/12/2016 21:13:44

[Michael GilliganParticipant @michaelgilligan61133]

Posted by Michael Walters on 14/12/2016 21:08:45:

… when the tax is meant to apply to businesses, not consumers, it just so happens that they decided we should pay it not them, whilst they may happily reclaim their proportion on their expenses.

.

Michael,

Sorry to be blunt, but that ^^^ is completely wrong

The guy at the end of the chain [i.e. the consumer] is, and was always intented to be, the one who pays the VAT.

… All of the businesses that are involved in the process are unpaid 'tax-collectors', effectively working on behalf of HMRC. The process is a game of "pass the parcel" and the one who is holding it, and not VAT registered, when 'consumption' occurs, is the one that pays.

MichaelG.

[Author]

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