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Subject: Wealth Tax

liamb17 6.05.22 - 08:56am

For business relevant items I agree. But isnt Vat taxable with the offset ? * +

kimjongl 6.05.22 - 09:03am

Do you mean VAT payable on the sales you make offsets the VAT you claim? Yes that's true, but the VAT you pay on sales was never your money to begin with, so you're not really paying anything. As long as you're happing with your GP Excl VAT the VAT you pay over never hurts you, it's the end consumers cost. Then when you buy something and claim it you're benefitting more than the average consumer because you're paying lower than the list price. Imagine an item is on promotion at a ridiculously low price, you would pay even lower than that. * +

liamb17 6.05.22 - 09:14am
Its not an averages consumers comparison, in my opinion, more specific to the relevance of business and all the offsetting and adding vat vs claiming vat can back fire also . Its not an easy cash pot. Businesses may incur a large VAT bill if they accumulate more VAT from goods and services sold, than the VAT paid on being a consumer for the business * +

kimjongl 6.05.22 - 09:54am
Businesses don't pay VAT, they withhold it on behalf of the government. It's not their money like with income tax. Any business should always hope they pay over large amounts of VAT to the government because that means they're selling more than they're buying in any given period. Being able to claim individual inputs is still advantageous while paying over net VAT and is a great way to avoid tax. * +

liamb17 6.05.22 - 10:11am
If we are talking corporate, yes I agree. Although still not a way to avoid tax. Its still an offset handed to the government before profit.
If youre an average consumer trying to avoid tax then vat doesnt work . Your pots of generated/owed vat vs product purchased vat has to co-ordinate, otherwise the offset greater or smaller will be accountable * +

kimjongl 6.05.22 - 10:55am
Only VAT vendors can use it, you can still be a VAT vendor while not necessarily being a corporate. VAT doesn't come into any calculation regarding profit. The VAT output on sales is not part of your sale price for income purposes. The offset you pay doesn't contain any of the businesses money to begin with, which is why claiming any possible input is an advantage because you can claim 100pc of the input portion versus the marginal tax rate percentage of the input portion as an expense if you didn't claim it. VAT isn't a business expense like income tax. It can affect your cash flow if not properly catered for. *

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