VAT. Is it entirely pointless for a service company?

Kennyboy66

A._Badger wrote: »

Yes, it's possible to deregister but the point about needless complexity holds good. Even if people can deregister now, they couldn't when they were sucked-in.

Defenders of VAT, in my experience, tend either to be accountants or people who work in finance departments. I've never met a sole trader who didn't consider it just another way for government to waste his time.

By its very nature it is bound to be wasting time as you are collecting the governments tax for them.

However I have yet to meet a sole trader or small business owners whos accounting records are in a worse state because they have to keep records for VAT.

In fact, it is a really useful discipline and can do done on a spreadsheet, analysis book, cheapo accounting package or just using A4 paper.

It is far easier than having to administer PAYE / NI and in most cases easier than calculating corporation tax or schedular taxes.

Of course before 1973, the UK had Purchase Tax, and in an environment which was much less focused around service industries and small businesses this was ludicrously complicated.

As one example, the Lotus 7 was provided in kit form to avoid purchase tax. However assembly instructions were forbidden using this tax loophole, so they provided disassembly instruction, which the user had to follow in reverse.