I RECENTLY paid my quarterly VAT bill. It was quite a lot of money. Enough to pay my tab at the Radnor Arms for close to three years or take my children away on a couple of exotic holidays to celebrate the exhaustive effort they have put into their exams over the last couple of years. Equally I could have invested it into my business, spent it on product development, equipment, staff training.

But I didn’t do that, I handed it over to HMRC, the government, as value added tax.

So I’ve always wondered, who adds the value and what value do they add? Years ago, before being eligible (eligible, that’s a debate in itself) for VAT, I would quote for a job and say to the client that will cost you, let’s say £5,000, because that’s what it worked out to. Now I say it will cost you £5,000 plus VAT, so £6,000.

Plus value added tax which the government has instructed me to charge you, collect from you and hand over to them.

So how has the government added anything to the value of the service I’m offering? I certainly haven’t added any value to the event to justify adding 20 per cent to my client’s bill. No government official has ever contacted me saying, ‘we’re going to tax your clients 20 per cent because of the value we’re adding to their event’. Never, they haven’t even offered to provide a free welcome drink at their expense to contribute to the ‘value added’.

Of course, in the not too distant past, there was no such thing as VAT, it’s just a term, cleverly dreamt up to grab more money from the people, it’s a stealth tax. I wouldn’t mind if they called it just TAX, and left out the offensive ‘value added’.

Let’s say you’re lucky enough to be paying 20 per cent income tax, national insurance, etc, after which, from a £25k salary, allowing for tax-free income, you’re left with £22k (all figures wildly approximate). Once you’ve spent the £22k, not a difficult task in 2018, you’ve paid another 20 per cent (£4.4k) to the government, so the value of your earnings is £17.6k. You’re actually paying 30 per cent tax on the full amount.

Tax on income, tax on spending.

That’s without the additional council tax, plus the cost of monthly trips to the dump because the council will only collect one bin every two weeks. Oh and excise duty (tax) on wines and spirits, stamp duty (tax) on buying a house, repaying your student loan (graduate tax)

Personally I find it embarrassing to ask my clients to hand over 20 per cent value added tax, I’d prefer to call it ‘government tax, because they aren’t getting enough into the coffers through normal income tax and don’t have the balls to sort that out tax’.

Maybe John Glenn could help me get this all into perspective, even though I’m an armchair socialist, I think he’s a pretty good guy.