Spring Clean Your VAT

Spring has sprung and now is the time to think about spring cleaning your VAT affairs.  We have some simple VAT housekeeping exercises for you and your clients to consider that may result in VAT and cash flow savings.

 

Do you provide supplies of services and send out invoices and account for VAT in advance of receiving payment?  How about changing this system so that demands for payment are issued with the VAT invoice being generated and VAT declared when payment is received. This can generate significant cash flow savings for some businesses.

 

Have you checked that you are complying with VAT schemes that you or your clients may use? For example, if cash accounting is used it is prudent to check that the threshold for the scheme has not been exceeded as this can result in an assessment for VAT penalties and interest.

 

If supplies of goods and/or services are made with different rates of VAT applicable to the supply, has the accounting system been checked to ensure that the correct VAT rate has been set for the supply? It is surprisingly common for businesses such as retailers that sell many lines of goods to have some products miscoded resulting in under or over payments of VAT due to HMRC.

 

Have your or your client taken VAT advice for one off transactions or transactions with a significant value? It is common for businesses to leave taking VAT advice till the last minute especially with one off property transactions when it may be possible to structure the transaction in a VAT efficient manner so that a VATable property can be acquired VAT free. Obviously with one or high value transactions an error can result in significant assessments for VAT, interest and penalties.

 

Finally, have your or your clients had training in how to account for VAT? This will help ensure that VAT accounting errors do not occur. Often attendees can identify VAT issues/opportunities for their business as a result of the training. It also adds to the evidence that should be kept to prove that a business takes reasonable care in accounting for VAT and therefore can help mitigate penalties. Please contact our training manager Tamara Habberley by phone or email tamara.habberley@thevatpeople.co.uk for more details of the training we can offer.

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