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Advice on VAT for Transactions

VAT Advice for Business Transactions

As a business, optimising your VAT position in the everyday course of your business transactions should be a key priority. Failing to do so can result in unnecessary costs for your organisation, or mean that your compliance obligations are not being met.

At The VAT People, we have years of experience in providing expert advice on VAT for business transactions, offering a wide range of advice and support services to help organisations decipher any complex VAT issues with which they may be struggling.

Our team of specialists has helped thousands of businesses to maximise their potential through high-quality and professional VAT advice, helping companies to enhance their accounting system efficiency, identify opportunities to save money on business purchases and remain in full compliance with VAT law.

Contact The VAT People to discuss your circumstances by calling 0161 477 6600, or fill out an online enquiry form and we will get back to you at a convenient time.

The VAT People can provide comprehensive advice on a wide range of topics, including the following scenarios:

  • Ensuring you have correctly identified the VAT liability of all of your internal and external transactions.
  • Reviewing your VAT recovery processes for business purchases and other transactions.
  • Assessing your policies on zero-rated or exempt supplies to ensure they are compliant and up to date.
  • Making sure you are aware of and taking advantage of any available reliefs.
  • If clients supply services on an ongoing basis, do they maximise cash flow by only issuing invoices when payment is received, with requests for payment being raised only to collect payment?
  • If a business has a turnover of less than £1.35 million, are they making use of a cash transactions arrangement, by which VAT on sales is only payable when a payment is received? Are they also aware that VAT on business purchases can only be claimed when a payment is made?
  • If the company is making use of bad debt relief and the client is on invoice accounting, does it adjust the VAT on any debts that are more than six months old, irrespective of whether the debt is genuinely bad? Does the client adjust for VAT creditors over six months old?
  • If zero-rated or exempt supplies are made, does the client regularly check that the VAT account liability remains correct, e.g., do they check the conditions to ensure the supply should be VAT-free and that input tax is recovered correctly, on the basis that it is recoverable in relation to zero-rated supplies and blocked from recovery in relation to exempt supplies?
  • What kinds of penalties can you incur by incorrectly dealing with VAT taxes? Whether looking to pay or file documents, click here to read more.

 If you have questions about these or any other aspects of VAT on business transactions, The VAT People are here to help.

FAQs

What is VAT grouping and how can it help my business?

Companies looking to streamline their VAT transactions can form VAT groups, which consist of multiple entities that must be under common control, and appoint a representative member on forming the VAT group. This allows the group members to be treated as a single taxable person for VAT purposes, submitting a VAT return covering the entire group's activities in the name of the representative member. Consequences of VAT group treatment include:

  • Any business carried on by a member of the group is treated as though carried on by the representative member. Any supply made by or to a group member is treated as a supply by or to the representative member.
  • Any supplies made between group members that would ordinarily be subject to VAT will be outside the scope of UK VAT, and as such output VAT is not due on such charges, nor is a VAT invoice required to be issued.
  • Input tax recovery is determined in accordance with the activity of the VAT group as a whole.
  • Furthermore, partial exemption rules apply to a VAT group as a whole in the same way as they would a standalone business. To clarify, if a group member solely generates VATable income, VAT can still be reclaimed in full on costs that solely relate to the activity of that company.
  • All group members are jointly and severally liable for any VAT due from the representative member.

If you or your client are looking to form a VAT group but are unsure of what implications this may have for the entities involved, please call our free VAT helpline for an initial discussion to identify if there are any VAT savings or VAT issues that may require our assistance.

How can VAT planning benefit my business transactions?

Effective VAT planning involves structuring your deals and transactions in a way that minimises VAT liabilities and maximises recoverable VAT. By doing so, you can reduce your overall tax burden and improve cash flow.

What should I know about VAT risks associated with business transactions?

VAT risks can arise from incorrect VAT treatment of business transactions, such as misclassifying the nature of a transaction or failing to apply the correct VAT rate. These risks can lead to significant penalties and interest charges. Regularly review your transactions and consult with a VAT expert to mitigate these risks.

How do expense accounts affect my VAT returns and financial statements?

Expense accounts play a significant role in your VAT returns and financial statements. Properly categorising and recording expenses ensures that you can reclaim VAT on business-related purchases and accurately reflect your financial position. Mismanagement of expense accounts can lead to errors in VAT returns and distorted financial statements.

What is Making Tax Digital, and how does it impact my VAT return?

Making Tax Digital (MTD) is a UK government initiative aimed at transforming the tax system to be more efficient and effective. Under MTD, businesses must keep digital records and submit VAT returns using compatible software. This change is intended to reduce errors and streamline the VAT return process, ensuring that businesses are compliant and their VAT data is accurate.

How can The VAT People’s VAT team assist with VAT returns and managing VAT risks?

Our VAT team at The VAT People offers comprehensive support for managing VAT returns and mitigating VAT risks. We provide tailored advice on preparing and submitting VAT returns, ensuring compliance with VAT regulations and identifying potential risks in your business transactions. With our expertise, you can have peace of mind knowing that your VAT obligations are in capable hands from the moment of VAT registration.

Contact us

For more information on the VAT advice we can provide, contact The VAT People today. You can get in touch either by calling 0161 477 6600, or fill in an online enquiry form to request a call back at a time that suits you.

To learn more about the team who will be advising you, visit our team page.