Re: It is not just lost VAT ...
"maybe they should just abolish VAT, which is just an additional tax. At least then those of us on PAYE will pay the same as contractors and others that can claim their VAT back."
I wondered how fucking long this would take to come up.
Contractors can only claim VAT back on business expenses, that is expenses incurred by their business - your employer does the same.
As a contractor I am an EMPLOYEE of my company I personally pay the same VAT on everything that you do. If my EMPLOYER buys something then they get to claim the VAT back as long as the thing that they bought is for business use. The fact that I own the company that employs me has no bearing whatsoever on this.