Does being legitimate & honest in business “cost” us?

Put simply, yes! Jesus sums it up best in the bible when he states we should all “Give to Caesar what is Caesar’s and to God what is God’s” (Mark 12v17 New International Version).

Jesus said this in response to a question posed by the Jews, who were trying to trap him into saying something they could then (they hoped!) use against him. Mark 12v14-16 sates “They came to him and said, “Teacher, we know you are a man of integrity. You aren’t swayed by men, because you pay no attention to who they are; but you teach the way of God in accordance with the truth. Is it right to pay taxes to Caesar or not? Should we pay or shouldn’t we?” But Jesus knew their hypocrisy. “Why are you trying to trap me?” he asked. “Bring me a denarius and let me look at it.” They brought the coin, and he asked them, “Whose portrait is this? And whose inscription?” “Caesar’s,” they replied.”

The wisdom in the answer Jesus gave in response to their question, left them amazed, but he made it abundantly clear we must pay taxes to the authorities. None of us like paying taxes, but without these funds Governments could not govern. It does seem very unfair that some folk in the UK evade paying certain taxes, whilst others don’t. Well frankly it is unfair, hence why there is sadly a financial “cost” to being honest and having integrity. The upside is being able to sleep at night and not having to keep looking over one’s shoulder.

For example most limited company’s in the UK are VAT registered. Infact any sole trader or limited company must legally register for VAT if their turnover exceeds £70,000 a year. We all “know” that not every person registers who should, plus that a black market exits. That said, there are also thousands of legitimate sole traders and small companies.

As stated on the startups.co.uk website “Once your turnover reaches the threshold (currently £70,000) — or will within 30 days — you must register for VAT. To work out whether you have to register, you can ignore the value of any capital assets — buildings, vehicles or equipment — you have sold and any exempt supplies. Putting off registration can be expensive as you may have to pay the HMRC the tax that you should have collected plus a fine as well. There are severe penalties for late registration and for VAT evasion.”

With VAT set to rise from 17.5% to 20% from 4th January 2011, the “temptation” for sole traders and/or small companies to avoid registering for VAT and for consumers to avoid paying VAT will no doubt increase. At Hazlemere Window Company Ltd, all our no obligation retail double glazed window, door or conservatory quotations include VAT. As with all legitimate businesses like ourselves, they can come up against “competitors” whose turnover is greater than £70,000 a year, who might be tempted to quote without adding VAT to their “price”, maybe possibly in return for a “cash” payment. It is also unlikely that sole traders or small companies will be able to offer the sort of comprehensive ten year guarantee on both the product and the installation that well established independent double glazing manufacturers and installers like Hazlemere Windows do.

Consequently legitimate businesses who charge VAT can “appear” less competitive on “like for like” products and/or services, than any firm with a turnover in excess of £70,000 who do not charge VAT, and suddenly its a level playing field price wise. Doing things legally and honestly is the only policy for any decent brand worth it’s salt, as on the whole most customers demand integrity, and indeed will more often than not choose such firms because they a) want peace of mind themselves and b) know they can be trusted.

So whilst giving “to Caesar what is Caesar’s and to God what is God’s” may not be popular amongst all the population, it is still surely the right thing to do, even though there is a “cost”?
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