why are so many things vat exempt?

[petemurphy]

some things are obvious but others you wonder why they are exempt - wonder how much could be added to the coffers by scrapping half these exemptions - e.g. printed magazines etc

http://www.hmrc.gov.uk/vat/forms-rates/rates/goods...

[plasticpig]

Printed magazines are not VAT exempt. They have a VAT rate of 0% applied to them.

[fatboy b]

plasticpig said:

Printed magazines are not VAT exempt. They have a VAT rate of 0% applied to them.

Which in most people's eyes = VAT exempt.

[plasticpig]

fatboy b said:

plasticpig said:

Printed magazines are not VAT exempt. They have a VAT rate of 0% applied to them.

Which in most people's eyes = VAT exempt.

That may well be true. The difference being though that it's far easier for the government to change zero rated products and services to a different rate than it is for them to apply VAT to exempted goods/services. Exempted items would require a change to EU law and other trade agreements IIRC.

[Eric Mc]

fatboy b said:

plasticpig said:

Printed magazines are not VAT exempt. They have a VAT rate of 0% applied to them.

Which in most people's eyes = VAT exempt.

That's because most people are ignorant of the legal distinction between the various VAT categories. There are actually three categories of goods and services which have no VAT charged on them -

Zero Rated items
Exempt Items
Items "Outside the Scope" of VAT

They are all different and they all give rise to different ramifications for VAT traders.

VAT is an extremely complex taxation system.

Edited by Eric Mc on Wednesday 13th October 12:14

[Fish]

Very important... Used houses are VAT exempt and New houses are vatable. If they weren't zero rated but exempt new house prices would go up dramatically.

[G_T]

Absolutely... Imagine how much extra revenue could be got if we started taxing children's clothes, basic foods and increased the VAT on leectric and gas.

Combined with reductions on benefits we'll make a fortune. Especially if we cut back on basic health care and education.

Sure a few oldies will freeze to death but that just means we save a bit more on pensions and inevitable medical bills...

We could afford more politicians then couldn't we?

Edited by G_T on Wednesday 13th October 13:39

[Eric Mc]

I think that the Zero Rate should be abolished and that a lower single rate should be introduced for all items that are currently Zero Rated or Standard Rated at 17.5% (soon to be 20%).

I would also drastically reduce the very generous £70,000 compulsory VAT registration turnover threshold. As far as I am aware, it is the highest in the EU (some countries have now threshold - all traders register for VAT - end of story).

Items that are Exempt from VAT should stay Exempt and items Outside the Scope of VAT should remain outside of VAT.

Edited by Eric Mc on Wednesday 13th October 13:52

[petemurphy]

G_T said:

Absolutely... Imagine how much extra revenue could be got if we started taxing children's clothes, basic foods and increased the VAT on leectric and gas.

Combined with reductions on benefits we'll make a fortune. Especially if we cut back on basic health care and education.

Sure a few oldies will freeze to death but that just means we save a bit more on pensions and inevitable medical bills...

We could afford more politicians then couldn't we?

Edited by G_T on Wednesday 13th October 13:39

why shouldnt we tax childrens clothes? why shouldnt we tax magazines roll your eyes at that one for example

[Eric Mc]

petemurphy said:

G_T said:

Absolutely... Imagine how much extra revenue could be got if we started taxing children's clothes, basic foods and increased the VAT on leectric and gas.

Combined with reductions on benefits we'll make a fortune. Especially if we cut back on basic health care and education.

Sure a few oldies will freeze to death but that just means we save a bit more on pensions and inevitable medical bills...

We could afford more politicians then couldn't we?

Edited by G_T on Wednesday 13th October 13:39

why shouldnt we tax childrens clothes? why shouldnt we tax magazines roll your eyes at that one for example

Many of the reductions in VAT or Zero Rating decisions came from political ideology or pressure from special interest and lobby groups.

You end up with some stupid anomalies - the famous biscuits v' cake scenario (or corn based snacks v' potato based snacks or even different VAT treatment between an atlas and a map.

[blindswelledrat]

Fish said:

Very important... Used houses are VAT exempt and New houses are vatable. If they weren't zero rated but exempt new house prices would go up dramatically.

Explain this. I don't really understand what you are getting at.

[petemurphy]

Eric Mc said:

petemurphy said:

G_T said:

Absolutely... Imagine how much extra revenue could be got if we started taxing children's clothes, basic foods and increased the VAT on leectric and gas.

Combined with reductions on benefits we'll make a fortune. Especially if we cut back on basic health care and education.

Sure a few oldies will freeze to death but that just means we save a bit more on pensions and inevitable medical bills...

We could afford more politicians then couldn't we?

Edited by G_T on Wednesday 13th October 13:39

why shouldnt we tax childrens clothes? why shouldnt we tax magazines roll your eyes at that one for example

Many of the reductions in VAT or Zero Rating decisions came from political ideology or pressure from special interest and lobby groups.

You end up with some stupid anomalies - the famous biscuits v' cake scenario (or corn based snacks v' potato based snacks or even different VAT treatment between an atlas and a map.

keeps you in business I suppose Eric! I just think it would be a good area to start regaining taxes if they must put taxes up

[Ozzie Osmond]

blindswelledrat said:

Fish said:

Very important... Used houses are VAT exempt and New houses are vatable. If they weren't zero rated but exempt new house prices would go up dramatically.

Explain this. I don't really understand what you are getting at.

I think he's trying to say,

- If you build a new house (or demolish one house and build a new house on the plot) there is no VAT on the construction work.

- If you build an extension onto an existing house VAT is payable on the construction work.

There is already a considerable incentive to demolish and rebuild rather than put on a massive extension. When VAT rises to 20% this will become even more of an incentive. After all, if it costs £100,000 to build the house you have "saved" £20,000 of VAT!!

[blindswelledrat]

GOod point Ozzie. THat had never occured to me.
Doesn't seem to be anything like Fish said though

[CaptainSlow]

Ozzie Osmond said:

blindswelledrat said:

Fish said:

Very important... Used houses are VAT exempt and New houses are vatable. If they weren't zero rated but exempt new house prices would go up dramatically.

Explain this. I don't really understand what you are getting at.

I think he's trying to say,

- If you build a new house (or demolish one house and build a new house on the plot) there is no VAT on the construction work.

- If you build an extension onto an existing house VAT is payable on the construction work.

There is already a considerable incentive to demolish and rebuild rather than put on a massive extension. When VAT rises to 20% this will become even more of an incentive. After all, if it costs £100,000 to build the house you have "saved" £20,000 of VAT!!

I think the point was about moving from zero rated to exempt for new houses. In both scenarios VAT isn't charged. The reason why house prices for new houses may go up is because if it moved to exempt status the builder wouldn't be able to recover any VAT on the cost of good/services incurred to build the house, therefore the sales price would need to increase to maintain the profit margin.

Edited by CaptainSlow on Wednesday 13th October 16:06

[Ozzie Osmond]

Apologies if I answered the wrong question, but I think the answer may be useful in any event!

[G_T]

Eric Mc said:

petemurphy said:

G_T said:

Absolutely... Imagine how much extra revenue could be got if we started taxing children's clothes, basic foods and increased the VAT on leectric and gas.

Combined with reductions on benefits we'll make a fortune. Especially if we cut back on basic health care and education.

Sure a few oldies will freeze to death but that just means we save a bit more on pensions and inevitable medical bills...

We could afford more politicians then couldn't we?

Edited by G_T on Wednesday 13th October 13:39

why shouldnt we tax childrens clothes? why shouldnt we tax magazines roll your eyes at that one for example

Many of the reductions in VAT or Zero Rating decisions came from political ideology or pressure from special interest and lobby groups.

You end up with some stupid anomalies - the famous biscuits v' cake scenario (or corn based snacks v' potato based snacks or even different VAT treatment between an atlas and a map.

What about Jaffa cakes?

[Jasandjules]

I am sure the Govt will be more than happy to add VAT on to some things BUT things like Children's Clothes would be a vote loser, so that won't happen IMHO....

Whatever the Govt put tax up on there would be complaints from some quarters.