A conversation with my barber

Who was rather annoyed about his tax bill!

The thing he's annoyed about is the £90K VAT Threshold - if you have a small business and your revenue is < £90K then you don't need to be VAT registered, but if it's over £90K a year then you do need to be VAT registered.

But the problem is there is no taper - there is a cliff, so if your revenue is £89K then you pay 0 VAT, if it's £90K you pay 20% on the lot.

If your turnover was £100K then you'd pay ~£16.7K in VAT, leaving you with just over £83K.

So you have to earn A LOT MORE once you hit this threshold to make it worthwhile....

If you have got a revenue of around £90K then it makes no sense to boost this slightly to £110, you'd still be taking home less than if you held it at £90K, and if you've got rent and rates to pay out of that like my barber does then it makes no sense to earn slightly more.

He's in a tricky situation, it's not as if he can suddenly just generate another £30K overnight, it's a risk.

In fact it's a known thing to business researchers in the UK, plenty of evidence of businesses around that threshold closing their doors for a month to avoid just going over it, for example.

HMRC say they like the simplicity of the current system, I say why not just make everyone pay it but then just give a rebate of 100% up to £90K and that make the VAT payable on anything over £90K.

It's so simple and relatively cost effective.

I think my barber is right to be annoyed....

I just wish he'd had been a little bit less distracted - he spent AGES shaving my head (three grades of zero) and much less time on the beard which is the main reason I went there and did a less than ideal job on that, nothing disastrous.

And the poor guy after me.... my appointment over ran by 20 minutes!

Damn the HMRC!