Many people who run successful businesses leave all thoughts of tax, including VAT, to their accountants. Certainly, accountants are knowledgeable about tax; it is, after all, part of what they do. The good ones will also bring matters to your attention. However, it is the business owner who is ultimately responsible and who would reap any ‘efficiency’ benefits.
For example, registration for VAT is mandatory at a certain threshold. Many people wait until their accountant has prepared the annual accounts to check this. This is frequently too late, can result in late notification penalties, and then the client blames the accountant!
So, keep your own eye on your own business. Make sure you know all the basic VAT rules that relate to your activities. Do not rely on other people to point them out. If HMRC does this, there may be penalties to help you to remember.
With VAT, there are sometimes choices to be made, and sometimes positive benefits from making the appropriate choices. If you are not registered, would it be good if you were? If your customers are VAT registered and can recover VAT, then you should consider whether it would be appropriate for you to volunteer and recover your own VAT costs? What about the Flat Rate Scheme? This is a method of accounting for less VAT than you actually charge. The amount you pay has a built-in factor to offset VAT on your costs. Bearing in mind you may not have much VAT on costs, this scheme can improve your profit margin.
If you are a retailer, are you aware you may have a choice of calculation schemes and the choice really can make a difference? Have you bothered to check? You could be losing a lot. There are other rules and schemes affecting other sectors. I suggest you find out if any relate to you.
The message is clear. Be proactive with your own tax affairs, take some control. This will give you an increased knowledge of your business, satisfaction, and confidence in being on top of things rather than worrying about them. And possibly some measurable financial advantage, which – after all – is what business is all about.