As The Guardian reports:

The chancellor announced in his budget on Wednesday that businesses would no longer have to pay VAT if they had a turnover of less than £90,000, an increase from the previous threshold of £85,000.

That is, of course, 100% wrong, 180 degrees from the correct direction. A business of whatever size has to pay VAT on items that carry VAT. The VAT limit is upon businesses which do not need to charge, or collect, VAT.

This is, we would submit, a fairly important distinction.

In more detail. Some items in the economy have VAT charged upon their purchase. A business - of whatever size - which purchases these items then pays the VAT on the purchase of those items. Fully chocolate covered biscuits - those essentials for a meeting of the important HR people - have VAT charged upon them. The small business - under the £85k or £90k limit - and the large will pay that VAT on the chocco biccies. The not chocolate covered biscuits - that meagre type more suited to meetings of less important than HR people like main board directors - do not carry VAT. Therefore the small and large business does not pay VAT on the less than fully chocco biscuits.

The distinction on the payment of VAT on chocco or non-chocco biscuits is not the size of the business doing the paying, it’s the chocco or non-chocco.

However, if the business selling the biscuits has a turnover of less than this new £90k then it does not - cannot - charge VAT on the sales price of the chocco biccies, however important the HR people are. And obviously doesn’t upon the non-chocco either.

The VAT limit is about who gets to, has to, charge VAT, not who has to pay it.

It’s possible that it’s the Chancellor who has got this wrong, it’s obviously true that a major national newspaper has. Neither of which fills us with much confidence about the level of economic understanding in this country.

But it does aid in explaining why so many seem to have so little grasp of the subject. If The Guardian, the major newspaper on the left, gets something so basic wrong then is it any great surprise that its readership is all at sea on the subject?