value added tax

You seem to have lost the argument regarding VAT due to you proposing something that would encourage inefficiency and now you are wanting to make it easier for some people to avoid paying tax!

"Ronald Raygun" wrote

Ah, but it does allow you to make many more services than you would otherwise make - presumably HMC&E prefer to take a slice of a much bigger pie, less a small amount for input tax (17.5% of lots of services less a little input tax) - rather than a slice of a much smaller pie (17.5% of much less services, even tho' no input tax offset) ??

"Ronald Raygun" wrote

Hmmm. You seem intent on "glossing-over" the fact that there *is* an "input of tools" to the process (ie it wouldn't be done without the tool) - even if there isn't an "input of raw materials".

Usually: Raw materials + Tools = Product. Why make a difference between the two elements of the LHS?

But the income tax hit is the same whether the labour works for a service company or the company using the service (assuming the same pay rates), it's just that if the service is bought in it would (in your scheme) suffer

Does that mean you think VAT should only be reclaimable on raw materials? Do you think VAT should be chargeable on labour which is providing a service?

Yes, but in this case I wasn't talking about buying in a service, but making a capital investment. The choice is between getting bodies to do the work and buying a machine to do the work.

Yes.

It has to for the system to work at all. I think that a service which A provides to B and B re-sells to C, should be VAT-reclaimable by B, because the A-B service is a "raw material" for the "product" which is the B-C service.