How jolly and festive.
Quote by GnV
Sorry Ben.
VAT is paid at a specified rate on virtually all goods sold in the UK. Typically, children's clothing is exempt. This means for consumers that the price you see on the ticket is the price you pay. The VAT element if applicable has already been added (its a legal requirement to show the VAT inclusive price to private consumers).
Now, take a simple example. The VAT rates have changed upwards since I left the UK of course, but hopefully this will give you a basic idea of how it works.
The RRP for an item on sale is £10. At the rate of % the goods are nett and the VAT element is That is the amount passed to the exchequer.
If the item is discounted to, say the netted down price (ie the amount without VAT going to the merchant) will be and the VAT element will be passed to the exchequer.
Therefore, by simple mathematics you have saved but the exchequer has lost
Multiply that by the millions of discounted transactions that take place every year and you can get a better idea of sizing. If the Government use their usual 'basket of goods' methodology for determining the likely VAT tax take, discounting can make a serious hole in their budgetary forecasts.
I hope that helps.
Quote by GnV
If, by exploiting loopholes left open by the tax administration system one is able to mitigate one's tax payments then that is fair game.
Quote by starlightcouple
11 mill for silence, cheap at half the price.
Quote by katniss
I don't "get" twitter tbh although I find Fookface a great way to keep in touch with family, friends and social groups.