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VAT A PERSONAL VIEW

28th March 1987, Page 39
28th March 1987
Page 39
Page 39, 28th March 1987 — VAT A PERSONAL VIEW
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Which of the following most accurately describes the problem?

• Mention VAT to the majority of business people and their top lip curls. Their scowl will be accompanied by a moan, groan or expletive.

Most businesses have to pay money to HM Customs and Excise every three months in respect of the dreaded Value Added Tax and that is the main cause of the pain. But hang about, what money? Whose money?

The businesses large enough to qualify for registration under the VAT scheme have sold their various products or services and have invoiced their customers for the full amounts properly due and payable. By Government request, the businesses must add 15% to their invoices and collect a small measure of taxation on behalf of the Treasury. Acting as unpaid tax collectors you cry, more records, more paperwork, more time wasted. Quite right. That is the bad side.

Is there a good side? What about the fact that you are allowed to collect money that doesn't belong to you and pay it into your bank account? And being entitled to keep that money for up to three months before you have to hand it over? If you are working on an overdraft (and who isn't?), the VAT man's money is earning you 15% or whatever rate you are paying the bank for your overdraft. If your bank account is in credit, it would make sense to transfer the VAT element in all payments received to a deposit account and let the tax man's money earn interest for you. At the very least, leaving it in your current ac-1 count will reduce your bank charges by increasing the national allowance calculated on your credit balances. fl by Frank Lewsey

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