a mixture of both dyno and road is best IMO. at least with a dyno as the consumer you can see 100% if its worked.
not sure on inclusive of VAT, but iirc stage 1 is 500+VAT, each additional stage is £50, so stage 2+ your looking at 600+ vat, so your saving 50sheets there. also bear in mind VAT goes up to 20% in january so its worth doing it now