I too have lived and worked in the UK, and I would guess that the vast majority of business there don't play games with the VAT. But those poor bastards get taxed at every turn (example: 80p for a liter of petrol, about 75% of which is tax). How do you think they would feel about Inland Revenue being abolished?
You never went to market day on some High Street somewhere? 90% of those guys don't play the VAT game.