Re: Life goes on.
I don't think you know how VAT works.
VAT is a tax on the end user, only raising revenue on retail goods and services. A VAT-registered contractor charges VAT to the client and pays it to HMRC (roughly, there is also the Flat Rate Scheme), from whom it is then reclaimed by the VAT-registered client. So in this case VAT raises no actual revenue for HMRC.