[rowdy]

Originally Posted by Luckypants

You only pay over VAT that you have charged. If your wife's business has 'relatively low' annual turnover, then she should be on the 'cash accounting scheme' whereby you pay the Revenue only VAT you have been paid. If she is on the invoiced VAT system (not sure what it is called) then yes, she may notice a lag where she is funding increased VAT payments before the money comes in off invoices, but this is intended for large VAT concerns which your wife's business should not be.

In general business just acts as unpaid collectors of VAT for the Revenue and only pays what it has charged (less what it has paid out in VAT) it's clients. It has minimal effect on cash-flow, unless of course you forget to save the VAT collected...

Personally, I don't really know the workings of it, but my wifes business is a hairdressers, so unless she increases prices every time there is a VAT increase she will feel the difference, and two fold as well as she is paying higher prices for the stock that she buys.

Edit; She has only just put the price up recently to cover the last VAT increase.