Murphy Richards’ guide to Value Added Tax

Yesterday, I briefly mentioned a tax that very few of my readers had heard of: Value Added Tax or VAT for short. You will recall that I heroically captured two VAT avoiders in the very act of avoidance.

People were already writing into me asking me how this tax works and would it be a good tax to introduce in the UK to prevent businesses avoiding paying tax on their turnover. But yesterday’s post inspired me to write a short piece of guidance on how to prevent criminal VAT avoidance…. by yourself!

Remember, VAT is a tax on you, the consumer, and it is you’re duty to ensure you pay the correct amount.

The fact that I had to correct a few of my readers, and point out that VAT was already in force in the UK, is slightly worrying. A few of them said they just paid over an amount to a shopkeeper and thought no more of it.

Of course, I did my moral and civic duty and filed a money laundering report on these readers and suggested that they were arrested for criminal negligence with regards to paying their VAT.

Despite its obscurity, everybody knows that VAT is a tax on the consumer. And although this is often regarded as a bit of a technicality by sophist tax professionals, consumers should be submitting regular VAT disclosures to HMRC and taking seriously their obligations to ensure that their tax is paid.

Whenever I buy something, be it groceries, electricity, pyjamas, coffee, glue, paper, pencils, a new calculator, staples, folders, a hole punch, treasury tags, a copy of my book State of Courage to read on a long journey, a cup of tea or a packet of chocolate covered digestives, I ensure that I get a VAT receipt. I then verify that the VAT registration number of the vendor is valid and perform money laundering checks. Nothing fancy, a quick ethical search engine search, copies of their accounts from Companies House (if applicable) and credit checks on the owners of the business.

After that, I fill out a form with all the businesses I have purchased VATable goods or services from along with totals of purchases at the relevant rate of VAT. By the way, it’s not an official form – Customs & Excise refused my demands for them to provide all taxpayers with a standardised one, as do HMRC as they now are.

This enables HMRC to verify that I have taken all the necessary steps to ensure I have paid my tax. As HMRC are so understaffed they are unable to respond to most of my disclosures, but I send them recorded delivery on a weekly basis so that I know they receive them and have an audit trail.

I then notify the shop of the disclosure and send them a certificate saying that they must hand over the amount of VAT due, if any.

Some people have questioned why they need a nil certificate, but I remind them to keep it for at least twenty years in case they are fraud-mongers.

Thus, I ensure that the business who has collected my tax on HMRC’s behalf has no option but to pay it over to The State. If I weren’t to do that, I would simply be negligent in the eyes of the law with regards to the payment of my tax.

So the people who were failing to do this were negligent to the point of criminality. After all VAT is liability and administrative burden on consumers, not businesses.

I mean, if it weren’t a tax on consumers in anything but a notional sense, then it’d just be some arbitrary cost of sale to a business, which they could argue was part of their tax contribution.

And you would have evidence to prove that. For example, you’d see the businesses challenging HMRC in court over the VAT treatment of their products rather than the groups of consumer activists or philanthropic individuals who fight for just and equitable treatment of products for VAT.

No, it’d be a discredit to these brave groups who bear the risk and financial cost of the legal proceedings, whilst gaining nothing but pride in return.

It saddens me to say that they are not always successful.

Their main reason for failing is because they refuse to pay for proper advice from a tax expert with a strong sense of morality.

I would like to voice my gratitude to them, in particular:

Mark Spencer
the Biscuits United litigation group
Mrs Jordan
the Bell family from Lazonby, and
Messrs Golden and Wonder

I would like to, but I won’t. I am sure it would only embarrass them. Especially given a couple of them lost their cases due to not seeking proper professional advice.

Basically, they really didn’t help very much at all, which puts my achievements more greatly into perspective, I must admit much to my embarrassment.

So, in summary, VAT stands for Value Added Tax, and you could end up in jail if you don’t do all the stuff I said above.

Perhaps, instead, you ought to seek professional advice from an ethical tax expert.

Murphy Richards
MurphyRichardsX@live.co.uk

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