From John Matthews, Director, Matthews Millman
As consultants, we have detected a growing trend for potential clients to indicate budget prices as being inclusive of VAT. For consultants who are VAT registered, this has the effect of reducing the resource base by 17.5%, which means either the client will receive a reduced time input from their chosen consultants or that those consultants may struggle to maintain viability.
We find this practice very puzzling: VAT registered client organisations are able to offset input tax against output tax so that it should be possible (and always was the case) that the full project budget can be allocated against the necessary tasks. Unless there has been legislation on this which has escaped our attention, we question why clients are increasingly adopting this perverse approach to their budgeting.
Or has some Higher Authority ordained that it is time to hit consultants in their corporate wallet?