No, honestly!
Now, I know what you're thinking, but you're wrong. There is a funny side of VAT, and I am about to share those delights with you. Admittedly, this is probably not going to be a laugh a minute, but in VAT terms, trust me, it's hilarious.
Some quick background
Now, I am not going to go into the vagaries of the entire UK and EU VAT systems as a) you would all be asleep before I got halfway through and b) my head would explode, and that would be messy.
Instead, here is a quick whistle stop tour of the main points.
VAT is a consumption tax, which is simple terms means the more you use, the more you pay. VAT may be paid by hundreds of thousands of businesses in the country, but it is only one group who normally suffer the cost -- and that's us. Businesses can often reclaim the VAT they have suffered, it is individuals who are stuck holding the bill at the end of the day.
VAT actually has a social conscience -- it is charged on 'luxury' items, so those least able to afford extra taxes should not have to pay it. By way of example, potatoes are zero–rated (i.e. subject to VAT at 0%) but a packet of crisps includes an extra 17.5%.
The current rate of VAT is, as we all know, 17.5% now that our mini-break to the land of 15% is over. And this genius measure to stimulate the economy clearly worked, as we are now officially, limping like a snail in the 100m, out of recession.
By the way, are there any other cynics out there who have noted the lack of price increases since January and surmised that perhaps the retailers have been pocketing the extra 2.5% over the last year?
So what's so funny about that?
Well, not much I admit, but food, as used as an example above, does give rise to a number of peculiarities that, to be honest, you just have to laugh at.
The most infamous VAT case in terms of food has to be the great Jaffa Cake debacle. As mentioned earlier, food, as a basic necessity, is zero rated for VAT, whereas luxury items, such as confectionery, are not. The definition of confectionery does not include cakes or biscuits other than biscuits wholly or partly covered in chocolate. And therein lay one of the biggest debates in VAT history.
If a Jaffa Cake is a biscuit, because it is partly covered in chocolate, it is therefore liable to 17.5% VAT. If it is a cake, regardless of whatever proportion of chocolate coverage it is sporting, it is zero rated.
Naturally the manufacturers (McVitie's) knew without a shadow of a doubt that it was a cake, after all the products are not called Jaffa Biscuits. However, the VATman (I don't believe he wears a black lycra suit and mask, but I would be delighted to be mistaken) offered evidence that Jaffa Cakes were stocked in supermarkets in the biscuit aisle and looked more like biscuits than cakes. Not only that, they were dunked in tea in exactly the same way that you might dunk a chocolate digestive, but wouldn't risk with a Victoria sponge.
It was stalemate. But in the end that was exactly what decided the case.
When you commit that cardinal sin against a biscuit and leave it open to the elements, it goes soft and loses its dunkability. A cake left out will, instead, go hard and stale.
A Jaffa Cake, as its name suggests, takes on the durability of a stone when overly exposed, and was therefore found to be a cake. Hurrah! Just think of all those pennies in tax you have saved.
But I don't like Jaffa Cakes…
If the Jaffa Cake debate hasn't tickled your fancy, consider the complicated situation as it unfolds with powdered milkshake products.
Milk in its own right is specifically zero rated, but milkshake powder, which does not actually contain milk itself, it classed as a beverage and subject to 17.5%. Unless it is chocolate milkshake. Chocolate milkshake is zero-rated not because it is a milk product, but because it is a cocoa product.
So, next time you are doing your shopping, investigate whether the banana and chocolate varieties are priced the same, because if they are, you know the manufacturer is milking extra cash on the chocolate one.
Or if you like fancy meats, you can rest easy knowing that all meat for human consumption is zero rated, be it chicken, beef, lamb, horse, kangaroo or ostrich.
However, do take care, because if you are selling live animals for slaughter, you do need to charge VAT on live horses and kangaroos. But not ostriches.
I think I shall go and put my head back in the sand!
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