VAT was 50 on 1st April 2023! A tax that was bought in to be a simple tax and has gradually become ever more complex and detailed with time. The regulations have grown to the point there are now over 40 Acts of Parliament and more than 130 Statutory Instruments and a wealth of case law to help guide us on this tax.
What started out life as a straightforward tax of 10% has morphed into a tax at zero rate, reduced rate, and standard rate. For those businesses with both exempt and standard rated supplies, there are partial exemption calculations; whilst for those dealing with property and construction there are a range of VAT reduced schemes for refurbishment, change of use and renewables.
Although it is a self-assessed tax, it is clearly not simple and contains a number of potential pitfalls. Hence for any business running their own VAT assessments, I recommend an annual review with an experienced accountant to ensure you are capturing your transactions correctly.
A note on VAT would not be complete without mention of one of the most angry reactions to a proposed VAT change especially as I am Cornish….The Pasty Tax! Pitchforks were at the ready when the suggestion to make all hot takeaway food standard rated at 20% which would have increased the sales price of the much loved and “hearty meal” pasty! The Chancellor beat a hasty retreat and his U-turn meant that pies, sausage rolls, pasties and similar that were sold warm simply because they were cooling down would remain zero rated. Simples eh?
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