Serious question re VAT

[Lord Bracknell]

Further evidence that the Chancellor and New Labour are helping small businesses?

Increasing Sales? No
Increasing red tape? f*** yeah!

If a small business chooses not to pass the VAT deduction on to customers ... the outcome is:-

Increased profits;
No change in red tape.

Small businesses will, however, continue to whinge about a Labour government. They always do. It's the law.

 

[Alex Alex Dawson oo! oo!]

Another absolutely shocking imposition on hard pressed small businesses by this Stalinist government LB. FFS it took almost 5 seconds to change the software package so I didn't have time to apply for for a ticket to the Falmer opening (ooops! - business meeting) on 17th December.

 

[Herr Tubthumper]

The Tax point is the date on the invoice/bill. QED

This is correct.

 

[Herr Tubthumper]

If a small business chooses not to pass the VAT deduction on to customers ... the outcome is:-

Increased profits;
No change in red tape.

Small businesses will, however, continue to whinge about a Labour government. They always do. It's the law.

Businesses whatever size moan. Their failure is always someone else's fault, whether it be the congestion charge, minimum wage, smoking ban, post-millenium blues.............funny it how it is NEVER a crap businessman who is at fault.

 

[sten_super]

Surely a firm would have to pay tax at 15% of £1000 and reclaim at 17.5% of £800.
How much a frim would reduce prices by would depend on laws of supply and demand, competition and price elasticity of said product. Maybe an economist can confirm this.
Firms might also agree to subtract the 2.5% for the sake of customer relations but I would imagine that there is no legal obligation for them to do so unless they've quoted an amount plus VAT.

No, VAT is only payable on value added to the product, in my example £200. The previous VAT payments have already been made by the time the product makes it into the shop. I think. Probably best to ask an accountant!

Yes inevitably the size of the price cut would depend upon elasticity of demand for the product. It also depends upon the level of competition in supply for the product; this is why you have seen supermarkets (who are to some degree price competitive) pass on the savings, whereas others haven't.