The Horror In the VAT

"What is a VAT number? Bob Shaw and James White have them too so they can't be limited to a certain age group. My first guess was that they referred to the artificial insemination chamber wherein the person developed, but I don't think that is correct. VAT could stand for 'Virile, Attractive and Talented' but I suspect it might mean 'very awful trash'. What does it all mean? Does the UK really license its artists? Or is it merely a permit to commit typing errors?" – A MOTA Editor

I'm always surprised when fans prove ignorant of VAT: it's undoubtedly the most science-fictional concept of taxation yet devised; how has it escaped the notice of omniscient Terry "The Shadow Nose" Hughes? In the US, l gather, there's a fuddy-duddy sales tax which is merely slapped like a wet kipper onto purchase prices at the last moment – a process totally without finesse. We used to have something similar over here, called purchase tax, but it was realised that far too many people could fathom its workings. When I tell you that the BSFA Committee nearly understood it, you will appreciate Parliament's concern. To remedy this unwholesome situation, our legislators imported a special. entropy-boosting package from the Continent; this proved to contain the closely guarded blueprints of the Value Added Tax machinery, as misapplied throughout the E.E.C.

(Let me pause in this serious discourse for a joke: "Keith Walker". Thank you. Meanwhile, back in the plot –)

The principle is simple, glorious and utopian – there is the same percentage tax on everything, but you are taxed only on the little bit of everything which you actually do. You also have the tremendous egoboo of being your own (unpaid) tax-collector. For example, let's suppose that you buy raw, uncured beanies and add propellers by a secret process in your workshop: then what you pay out for the beanie is naturally called the input cost and will include VAT at 8% charged by the seller, so that two-twenty-sevenths (as honest accountants and Kev Smith will agree) of what you paid is tax. Since you are registered for VAT, you wise and prudent person, you can reclaim this. But when you sell a completed Chrome-Plated Propeller Beanie With Inbuilt Blog Dispenser to some deserving fan at your normal modest 500% profit (this is not intended as a satire on DNQ, far from it), the majesty of the Law compels you to charge an added 8% on the sale price – which, being the money you take in, is called the output. In your trusted role as a VAT collector you are graciously permitted to send any output VAT to the same tax office from which you claim the input VAT. (If you don't avail yourself of this privilege, you will be awarded sanitary accommodation at Her Majesty's expense.) Mathematicians in the audience will be swift to realise that as a net result, each person in the great chain of production collects 8% VAT on his or her actual profit and dutifully presents it to the Government. How much more just, and egalitarian than a tax at point-of-sale!

("But where," you ask, "is the hilarious fannish ambience? The ebullient British wit of which I've heard so much?" Unfortunately, Britain is suffering from industrial disputes and quip-shipments from Leroy Kettle are failing to reach the rest of us. Tough luck.)

As described, VAT is no real challenge to the mind. It can be grasped as easily as quantum field theory; it lacks the rich complexity so essential to the livelihood of lawyers. Thus we have introduced different rates of VAT: the standard economy rate is currently 8%, but you can go first-class and pay 12.5% on luxury goods like petrol and hi-fis. Scientific equipment manufacturers are often found in corners biting their toenails since much equipment includes some components taxed at standard rate and some which, because they could conceivably be used in a hi-fi system, have the 12.5% stamp of luxury. Then there are zero-rated things on which you don't pay any VAT at all, like books and food (though not junk food ...), and exempt things on which you don't pay any VAT either, and which differ from zero-rated things for reasons known only to the Great Accountant in the sky. (Kev Smith, ACA, says that I am guilty of oversimplification here, since I have not mentioned a third category of things on which you pay no VAT – things which are neither zero-rated nor exempt, but "outside the scope of the tax". To mention these things would only confuse you, and so I won't.) The seeming intricacy of the Worldcon constitution pales into insignificance before the labyrinths of VAT, which has now reached the stage where a whole official booklet (one of many) is devoted to the VAT status of second-hand electronic organs.

The fascinating game is refereed by H.M. Customs & Excise Department – not the happy-go-lucky Ian Maule branch which spends its time fumbling sweatily through naughty magazines and jailing Americans for importation of illicit corflu, but a team of brutal, jackbooted professionals with powers of search and entry (no kidding) should they suspect you of wantonly confusing the outputs you rake in with the inputs you shell out. But they must have a piquant sense of humour, also unlike Ian Maule, to devise some of the regulations they publish. I've been a registered VAT person for a little while now – it's less painful than a vasectomy – and have received 388 small-print pages of exciting VAT information. The awesome and terrifying distinctions between crystallised ginger (8%) and ginger preserved in syrup (zero-rated); insoluble grit (8%) and soluble grit (zero-rated); food put up for sale for pet rabbits (8%) and rabbit food (zero-rated); angels dancing on the point of a pin (8%) or of a needle (zero-rated) ...

("Look, Mummy, the nasty man is being all unfannish. Make him stop, make him tell a joke about Peter Weston."

"Hush darling. Nice Mr. Hughes is embarrassed already, don't you make it worse for him.")

Jolliest of all is the merry-go-round existence of authors registered for VAT (compulsory if they earn over £10,000/year; voluntary if they just want to reclaim VAT on typing paper, etc). The keen, alert mind of the reader will already have seized on the point that books are zero-rated and that therefore authors shouldn't have any trouble. (Even the editor may be groping dimly towards this conclusion.) Wrong! There's no VAT on mere published books, but the Act of Creation is chargeable at 8%. What actually happens is that after a long week of effort, Joe Hack [*] knocks off another novel, and submits it to his UK publishers with an invoice for his advance plus 8%. (Foreign earnings aren't subject to VAT, "because foreigners say things like Shucks when invited to pay it" – A. Pundit.) His publishers, being registered, claim this VAT from Customs & Excise and pass it to Joe, who with a cry of joy sends it to – guess who? – Customs & Excise. The VATman giveth, and the VATman snatcheth it back. Anyone fool enough to buy the (zero-rated) book has the consolation that he pays no VAT; neither do authors and publishers when you work it out, but this solemn exchange of cheques and invoices (under the Janus-like gaze of H.M. Customs & Excise) gives an impression that much is being achieved. As indeed it is: who knows what nasty ideas these authors might get if our wise Government didn't keep them busily filling in their little VAT forms?

There, I've finished; fannishness may recommence and T. Hughes may breathe once more. That's all. You may go now.

* I would have said Rob Holdstock, but my tact is legendary.

2005: Many details have since changed. New and exciting cross-border EU VAT arrangements are now in operation, while the standard 8% and luxury 15% rates have long since been averaged out – using HM Treasury arithmetic – to a universal 17.5%.