In a possibly ruinous development, the bastards at HMRC have snared me for VAT. In the short term, pricing remains unchanged for my loyal client base. Long term, it might see us shut up shop.
Why? Well, because we deal almost exclusively with domestic clients, so it’s annoying to reach and breach a meaningless turnover threshold that hasn’t risen despite the cost of doing business having rocketed for everything else in Boris' Brexit Britain. Normally, Nige and I undertake only so much work to keep just south of that glass ceiling, but I took my eye off the ball at the end of the 2021 financial year and my invoicing went over by enough for Her Majesty’s finest to wallop us with the VAT hammer.
What this means is a 20% tax is now levied on my invoicing. It doesn’t change anything on materials; they always included VAT, but it hits us on labour leaving me with three choices:
1. Keep pricing the same and take 20% up the ass.
2. Add 20% to the current pricing.
3. Increase pricing by less than 20% to split the difference.
Having already put pricing up twice this year to reflect the increased expenses in basic operating costs, I fear suddenly sticking on another 20% will alienate my loyal client base and leave us uncompetitive for new work. So, I’ve gone for option 1 which means we still do the same work for the same price, but now 20% is blindly thieved by an inept and corrupt government to be blown on cheese and wine parties or tractor porn.
Even though labour pricing hasn’t been altered and the bottom-line figure on an estimate is the same now as it would have been last week, the fact a VAT figure is even shown will be disastrous as clients will assume they can get the job cheaper from non-VAT competitors or they’ll start all the ‘how much for cash’ bollocks.
How much for cash? Same damn amount. I don’t want cash; the money needs to be in the business account to cover operating costs, not stuffed under my mattress alongside my naughty tractor magazines. In fact, anyone asking me for a cash discount risks my walking away from the job because it sets alarm bells ringing that my later invoicing may be questioned by a penny-pincher. If you want a proper, legitimised, certified and warrantied job, don’t expect to pay less and have me defraud HMRC on your behalf.
People have been telling me that it won’t be crippling for the business, but this company was VAT registered five years ago and the workload nosedived. Besides which, why should I even bother getting out of bed in the morning if a fifth of the labour is to be stolen by the government? And not just any government, but Boris and his cronies who are all so openly lining their own pockets. Nigel and I now have to work harder to earn the same amount, and we only earned enough before to keep the business ticking over.
So, yeah. VAT. A 20% tax that penalises the small business for earning just a bit too much. A tax that puts me at a disadvantage to other 1–2-man bands I'm competing with who don’t have to pay it. A monetary amount that domestic clients figure they’d rather not pay when they see it in black and white on an estimate or invoice even if the grand total hasn’t changed.
Don't believe any crap the government spins about tax not having to be taxing or how great Britain is for entrepreneur's. They're out to screw you.