VAT or no VAT?

Let me introduce you to my new friend John Smith.

John is a computer consultant working through his own limited company and has had a very taxing time in the last five years.

He encountered many sleepless nights worrying about his consultancy contracts because of IR35 and then even more stress awaiting the Arctic Systems decision.

His wife is a 50% shareholder of his company and has always received a very healthy dividend for her efforts! He is now ringing his accountant every day for an update on the new capital gains tax rules in case he gets an excellent offer to sell his business or company shares.

However through all his troubles he has been comforted knowing that one tax has given him no problems at all: that 'simple tax' introduced in 1973 namely VAT.

But all that is about to change...