The thin end of the wedge
Anna Szymańska is a tax senior manager at the Warsaw office of Ernst & Young.
VAT is a subject often written about in newspapers and professional periodicals. It's one of those topics that generates much debate and argument. What I didn't realize until recently (and for this my thanks go to my colleague Jacek Koba, the author of the tale set out below) was that not only does VAT cause sleepless nights for VAT taxpayers and consultants alike, but also the language and correct usage of the terminology can lead authors to the very edge.
You may wonder what is the most frequently asked question of an English language specialist. Is it when to use "the" and "a," how to simplify a complex sentence or what is wrong with "shall?" No, not by a long shot. The readers' minds are exercised by worthier and more fundamental issues, such as which of the two forms is correct: VAT-able supplies or VAT-taxable supplies?
The issue had become so vexing, the questions so urgent and the questioners so perplexed that it was but a matter of time before Koba was called in to arbitrate. As time-honored tradition dictates, he weighed up the arguments on both sides, consulted widely, and poured over the evidence until, many cups of hot cocoa later, the answer stared him in the face.
The term VAT-able supplies draws support from students of word morphology, veterans of tax advising, business jargon aficionados and selected English language neophytes. VAT-taxable supplies enjoys broad appeal among aesthetes, stick-in-the-mud precisionists, formalists as well as those completely new to the game. The VI Directive (the infamous European Union directive which relates to VAT) evangelists in the office do not represent a unified lobby either, as is clear from the submitted documents, and write as the spirit moves them.
At the heart of the matter is the divergent perception of the three letters VAT together. Looking at their fearful symmetry, some see the word "tax" in their midst, while others don't. Those who do follow the standard rules of word formation add the suffix "-able," which imparts the idea of possibility and capability, while the others add an extra word - "taxable." Both camps, however, are hamstrung in their attempts to shorten the somewhat wordy "supplies on which VAT is charged," but each is prepared to gouge out the other's eyes for its iconoclastic approach. Such is their enmity.
Abuse is hurled across the divide with unrelenting ferocity. Some of it ricochets off and hits the author for being unable to decide where his loyalties lie, or for coming down on one side and then switching allegiance. And let it not be said that the rival groups lack evidence to bolster their case. Type "VAT-able supplies" into a search engine, and the Internet will oblige happily with scores of examples. Type in "VAT-taxable supplies," and more than a handful of sites will deliver the goods. Prominent names will come up as well, including Ernst & Young and Deloitte & Touche, next to such geographic names as Manila, Nigeria, Flanders, Poland and Belgium. Yes, Belgium. The two organizations that the trawl will not turn up, the two organizations that one might expect to settle the dispute once and for all, the two organizations which have a celebrated history of chasing tax dodgers and smugglers of bootleg alcohol and tobacco, these two organizations are not there. They are Her Majesty's Customs and Excise and the Inland Revenue Service. For their purposes taxable supplies or chargeable supplies must do.
According to "Revenue Law," edited by Michael Tookey, "VAT is levied at each stage of the production of an item on the value added by the trader; in practice a trader making only taxable supplies is liable in each quarter to pay to the Commissioners the difference between the VAT charged on supplies made to him for the purposes of his business (his input VAT) and the tax he charges on his own supplies (his output tax)." Elsewhere the commissioners speak of supplies subject to VAT or services chargeable to VAT. This goes well against another Belgian dictate where it is accepted practice to say "services are charged with VAT" - an expression never heard in the land of Shakespeare, Marlow, Austen and Dickens.
The problem remains with what to do about the VAT-able supplies and VAT-taxable supplies. The problem is all the more acute because it mars the correspondence between a merchant in Languedoc, a trader in Bourgogne and a tax adviser in Warsaw. To use both forms interchangeably would fly in the face of consistency, which is an iron rule in business writing. To use one of the forms would clearly favor one group over the other. To use the forms known north of Calais would be high treason.
On closer inspection both forms are flawed. Despite the universal use of the abbreviation, VAT remains essentially value-added tax. Following on from VAT-able supplies we get value-added taxable supplies, which reads as taxable supplies that are value added or value-added supplies that are taxable. Put another way, does "value added" go together with "taxable" or with "supplies?" A fine distinction one might say, but an awkward combination nonetheless. VAT-taxable supplies, on the other hand, yield value-added taxable supplies. This is where the English language comes unstuck.
Throughout history languages have always found ways to adapt to the changing reality. English has had pride of place among them. It has managed to accommodate anything from a dissertation on the evolution of zooplankton to spaceflight manuals. Indeed, it has been the language of choice of the entire international business community. Until today, that is, when an intractable and divisive language point in the tax department of Ernst & Young in Warsaw has led to a schism in the ranks.
The rest of the world is still at the stage of deciding whether the abbreviation should be pronounced by spelling out each letter or whether it should just be "vat," as in container. The threat of undoing that the English language faces in Warsaw is of a wholly different magnitude. For English has been put to the test and found wanting. And if a language can cope no longer, and if a weak point in its fabric polarizes a community, it is but a short step before the entire populace is thrown into turmoil and civil unrest follows.
Rather than opining on which form is correct then, one is compelled to ask whether the split between the supporters of VAT-able supplies and the proponents of VAT-taxable supplies could mean the thin end of the wedge? The end of the road? The end of civilization as we know it?
