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Follow on Google News | Goodbye To VAT - Can A New Website Lead Us To Tax Utopia?At a time when we're all tightening our belts to uncomfortable levels, could a new website help loosen a few notches?
By: Keith Pearson January's rise in VAT to 20% is now starting to bite and many small businesses in particular are feeling the pinch as their customers rein in their spending. However, one of the most fundamental rules of VAT legislation allows both the business and consumer to avoid VAT altogether. Few people beyond those who run their own business will have much interest in the rules and regulation surrounding VAT. As a consequence, most consumers are unaware that any business with an annual turnover of less than £70,000 does not have to register for VAT and therefore, won't charge you the 20% tax when they come round to fix your boiler or mow your lawn. Conveniently, many of the Trades that would fall below the VAT threshold are sole traders or new businesses so a £60,000 - £70,000 turnover for many of them represents a very comfortable living or encouraging start to their enterprise. Whilst in theory this sounds a perfect proposition for all concerned, the major drawback is that unless you are happy to ring every Plumber in your phone book to ask if they're VAT registered or not, there has never been a simple way for consumers to find businesses that don't charge VAT – until now. Keith Pearson, an Internet Marketing Expert from Hampshire is the founder of VATaway.com; “When I first started out in business the customer nearly always wanted to pay in cash as they wanted to save money by avoiding VAT. Even after I explained that I wasn't VAT registered and charging them VAT would in fact be illegal, the customer usually still insisted on paying cash.” Pearson went on to add, “This is not a loop-hole or some dodgy tax avoidance scheme. The VAT threshold has been in place for many years and I think it would be a brave Government that even considers removing it.” Perhaps it is seems almost too good to be true that we can now live a VAT-free lifestyle. And indeed there are some limitations on what types of businesses will decide against VAT registration. VAT Mitigation Specialist Richard Henley commented, “If a company decides against registering for VAT, it means they can't claim back the VAT on their expenses. If a business has a high level of expenditure on equipment or supplies to do their job then it is unlikely to make sense for them not to register for VAT. However, smaller businesses that are based primarily on providing a human resource such as Mechanics or Cleaners may be better-off without VAT as what they can claim back is often less than the extra income they can generate by not charging customers VAT.” Considering Henley's comments, a quick analysis shows that an awful lot of money could be saved in the average household each year if they only used businesses that didn't charge VAT. Mechanics, Plumbers, Gardeners, Window Cleaners, Decorators and Builders are just a tiny proportion of the type of business we all use regularly. The VAT on a having your lounge painted is around £40.00 alone. So has VATaway.com managed to dispel Franklin's grim theory? Keith Pearson summarised, “For the website to be a success it needs the support of small businesses and sole traders who want to promote the fact that they don't charge VAT. We need as many businesses listed on the site as possible to make it any attractive proposition for consumers. It's a bit of a virtual chicken and egg at this stage.” Businesses interested in promoting their non-VAT status can do so free of charge by visiting www.vataway.com or calling 0845 307 6177. End
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