Imagine buying a new laptop for your small business. The receipt shows a base price of £800 plus a charge labelled “VAT” of £160, making a total of £960. A few weeks later you invoice a client £1,200 plus £240 VAT. In this chapter you’ll see why your business doesn’t actually keep (or lose) that extra money — it simply passes it along to the government — and you’ll learn exactly how to keep the books so that the tax never distorts the business’s own profit.