10 Weird Facts You May Not Know about VAT

VAT or Value-added Tax is a form of consumption tax imposed by the national government of the United Kingdom. The country saw introduction of this modern day tax system in 1973; right now, it is the third biggest source of revenue for the UK government. The first and second sources are income tax and National Insurance respectively. Value Added Tax is collected by Her Majesty’s Revenue & Customs, mostly based on the VAT Act of 1994.

VAT was initially a simple tax. However, over time it has become quite complicated. Due to the immense complications of the VAT system, experts often refer to it an economic theme park where legal and factual realities are inverted and suspended. For those who consider this definition of VAT an exaggeration: here are 10 weird facts about VAT.

  1. VAT imposed on gingerbread-men varies based on the kind of decoration the item boasts. If you are purchasing a gingerbread-man that just has a couple of chocolate spots depicting its eyes, you will not need to pay an additional amount as VAT. The moment any other chocolate decoration is added to the item, VAT will be applied.

  1. Stolen cash is definitely subject to VAT, but the same rule doesn’t apply to goods stolen from shops.

  1. You might find this rule even weirder; VAT is imposed on all counterfeit goods, but there’s no such rule for counterfeit cash.

  1. You will have to pay VAT when buying shortbreads that come coated with chocolate; however, if you love shortbreads with caramel coating, you will be saving the amount spent as VAT.

  1. Honeybees are not taxed under the VAT system, but bumblebees are.

  1. Petrol, poodle food, orange squash, and ice cream are all categorized as “luxuries”; however, Labrador food, lap dances, and caviar are not listed under any such special category.

  1. According to UK”s VAT act, Ferrets are pets; the country’s law, however, doesn’t consider rabbits as pets.

  1. Although all physical publications have been exempted from VAT, one will need to pay the tax when buying eBooks.

  1. The majority of the nuts, which are sold with their shells on don’t require the buyers to pay VAT. However, the ones that are de-shelled always attract this tax.

  1. Last, but not least the VAT rules surrounding Jaffa cake are considered among the weirdest. As a result of being tagged as a cake by the Upper Tribunal, the tax rules applicable for Jaffa are different from what it would have been if it was a biscuit.