HMRC to target small practitioners next?

After the latest morality vs tax avoidance pronouncement by a Government minister I fear that I, and small businesses like mine, are going to be the next targets.

Why? Because I regularly avoid paying PAYE and NICs on the services I consume, and sometimes VAT too.

Take today, for example. Fed up with waiting for our local plumber to come and fix the loo I called by our local DIY store and bought the materials myself - for cash. Even better, they had a discount running which effectively reduced the cost by the amount of VAT on the full price, so I sort of got them VAT-free (doubly in the end, of course, because I also reclaimed the VAT on the receipt). I then mended the loo myself, which means that I avoided paying the plumber, which in turn means that I avoided paying him an invoice plus VAT, and I avoided giving him money on which in due course he would have paid Income Tax and NICs.

So for a small effort on my part I have denied the Treasury a small chunk of tax revenue. Imagine if everyone engaged in DIY (with or without discounted materials) - we would put builders and decorators out of business and make a massive dent in the Government's receipts. Maybe they will make DIY illegal. It would get my wife off my back if they did!

And I have decided we can manage without a window cleaner, I just clean them myself after work once a fortnight. There's another load of VAT and tax avoided! Until they make you produce a CIS card or something similar before you can buy a bucket and sponge. Or maybe you'll need to get a licence from HMRC to own a step ladder.

It may not be tax avoidance - yet - but apparently it's immoral.

 

Comments

Great Post

refs8 | | Permalink

Great post - just sacked the cleaner, all my staff and the postman has been told to stop coming - well he has virtually anyway, sacked all my clients (I wish) and well I have now saved ashed of vat and tax payments !

What next - I ask ! 

Do they live in the real word or a bubble.

If you reclaimed the VAT this

jpcentral | | Permalink

If you reclaimed the VAT this was, presumably, a business expense so you have increased your profits (reduced expense) by the amount which you didn't pay the plumber. And, of course, you will pay tax on this increased profit.

Of course, if the work wasn't a business expense, you wouldn't have been able to reclaim the VAT so the taxman would at least have got that.

 

John Perry

www.centralbusiness.co.uk

 

nigel's picture

Is not working tax avoidance?

nigel | | Permalink

Over the years I have had several clients involved in building and property development who have worked for part of the year to accumulate some funds, then spent the rest of the year working on their own properties - I think one just went travelling in India instead. Is not earning, and therefore not paying tax or collecting VAT from customers, tax avoidance, immoral, or just plain lazy?

smart?

RussellD | | Permalink

nigel wrote:

Over the years I have had several clients involved in building and property development who have worked for part of the year to accumulate some funds, then spent the rest of the year working on their own properties - I think one just went travelling in India instead. Is not earning, and therefore not paying tax or collecting VAT from customers, tax avoidance, immoral, or just plain lazy?

or just smarter than the rest of us?

Definitely tax avoidance    2 thanks

Eddystone | | Permalink

I have a client with a cafe who strives to keep below the VAT threshold. She has a seasonal business on the coast and when she gets near the VAT level she just shuts down for the winter !

She argues that if she had to register she'd have to remain open for another couple of months just to recoup what she loses in VAT, so why bother ?

dbowleracca's picture

That's the worst of the avoidance arrangements

dbowleracca | | Permalink

It is such a common thing that, because of the damage to profits, a lot of small businesses who provide services to the public ensure they do not exceed the threshold.

It would make sense to make all businesses that make VATable supplies register for VAT regardless of turnover, this avoiding the unfair competitive advantage they get and also encouraging them to strive for greater turnover and profits, and job creation.

I wonder how many potentially super successful businesses have never employed someone or grown to their full potential just because it saved them some VAT?

ShirleyM's picture

Keeping it simple

ShirleyM | | Permalink

A lot of people don't want large complex businesses that employ people. There are many reasons for keeping a business small, and the VAT threshhold is just one of them.

If VAT, and other things, were made compulsory, it may seal the fate of the 'lifestyle' business. While these businesses may never make massive profits, or employ people, they do provide an income for one person, and possibly their family, too. Better that they pay a little tax than them claiming unemployment benefit.

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