It pervades our daily lives, none of us really like it, the reasons for its existence make us suspicious but it is here to stay.
We are talking about three little letters that are enough to make any accountant rub his or her hands together with glee: VAT. Yes, good old Value-Added Tax (seems to be taking away value to us!) has been around for a long, long time and doesn't look like it is going anywhere soon so we have just had to get used to it. Though not in all situations….
Most people are aware of the general rules and systems surrounding the payment of VAT. A charge of 20% is added to an extremely wide and varied range of products, excluding ‘necessary’ items such as bread and milk, though it is an ‘invisible’ charge as it is generally included in the stated price for domestic purchases.
Many organisations and businesses, including our own, regularly supply to trade customers and so our prices are shown both including and excluding VAT, allowing you to see at-a-glance the actual price you will end up paying. Those who are self employed and complete their own tax returns are entitled to claim back the VAT they have spent on anything that relates to their work.
For instance, someone with a home office would be entitled to reclaim VAT paid on items such as their computer and the power it uses, printing paper and ink. Similarly, those involved in the construction and restoration industries can reclaim VAT paid on such items as wall ties, wood screws, timber frame nails, gutter fixings and more. What many people DON’T know is that non-professionals building their own home or converting a non-residential building into a dwelling place.
Those who don't know this are literally paying one-fifth more than they need to for all of the fixings mentioned above. For every £10 you spend, you could be putting £2 back into the pot; always helpful when you are working on a large project and you just keep having new ideas…