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If I add VAT to my services (Output) I have to pay that to HMRC. If I buy services (Input) then I deduct the total Input from the Output and pay/get paid the difference. (or at least this is my memory).
That is different from me selling a buttplug for $5 which costs me $3 to make and paying CGT on the $2 profit - which is fair.
That is how it works but why isn't it fair? Supplier only deducts the VAT part charged to you, not the whole cost - it's just a way of making sure the VAT just sticks with the end transaction instead of applying at every stage of a supply chain.
It's also in addition to, not instead of CGT. So if the business has some spivvy scheme to get deductions for costs incurred in Cayman, they still pay VAT - they can only deduct VAT (Input) if they've actually paid VAT to someone else.
Given that we're mainly talking about big tech here an alternative to VAT would be for a % on revenue generated in the UK.
This was exactly the case where I thought VAT was pretty much doing the same thing that would be doing though...
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andyfallsoff
If I add VAT to my services (Output) I have to pay that to HMRC. If I buy services (Input) then I deduct the total Input from the Output and pay/get paid the difference. (or at least this is my memory).
That is different from me selling a buttplug for $5 which costs me $3 to make and paying CGT on the $2 profit - which is fair.
Given that we're mainly talking about big tech here an alternative to VAT would be for a % on revenue generated in the UK.