At a time of rising costs for business owners, here are some practical tips about how a small business could reduce its VAT bills or improve its cash flow.
VAT is often the forgotten tax. Charge VAT on your sales and claim it back on your expenses. Submit and pay a return once a quarter. End of story.
However, there are many concessions and opportunities in the legislation to reduce the VAT bill at the end of a period and also to improve the VAT cash flow for a business. An obvious example is the cash accounting scheme, available to a business with annual taxable sales of £1.35 million or less excluding VAT, where output tax is not declared on a return until customers have paid their dues. Input tax cannot be claimed until suppliers have been paid but it is a winner in most cases because debtors usually exceed creditors.
In this article, I’ll consider some potential VAT savers and cash flow opportunities.