VAT and the end of the year agenda

Wednesday, December 7, 2011

by Nick Ryan

The tax tsunami rolls on for businesses and accountants alike. Having just got over the income tax return deadline, faced the budget and the changes required from it businesses now have to look to the end of the year and what this can bring for their business. Often it is said that the end of the year is a good opportunity to reflect on the past and consider what can be done better in the future, to create your “wish” lists to provide for a better 2012. From a VAT perspective the end of the year signals for a number of businesses the need to consider their VAT accounting systems to ensure both that retrospective compliance was efficient and to carry out various exercises to determine VAT compliance for the future year.
For businesses involved in the property sector or with property interests then there may be a requirement to complete a capital goods scheme review to ensure VAT recoveries on property is in order. Holiday investments may also need to review to ensure the scheme is working and all tax liabilities are met; consideration as to the next year is useful to determine any potential pitfalls that could arise.
For tour operators, travel agents and other businesses falling within TAMS like conference organisers then there is the end of year assessment to ensure the margin applied is correct. Also this assessment can be used to consider next year’s margin.
Cash businesses should be reviewing their product lines to ensure that correct VAT rates are in place, assess their mark ups and margins to ensure they reflect the current business activity and operation and, overview their accounting systems i.e. cash registers and EPOS system to ensure compliance obligations can be met and risk of error is reduced.
Business with VAT exempt activities should take a look at their dual use method to ensure firstly does it reflect the activities of the business and thereby provide for the accurate recovery of VAT incurred on dual use costs. Secondly they should examine their attribution of VAT bearing costs to ensure it is correct and the recovery of VAT is maximised.
With cost reduction a key mantra for all businesses getting the VAT right is a key prerequisite in fulfilling this mantra.
For assistance in undertaking any of the above or, if you have concerns about management of the VAT compliance function then please contact Nick at the VAT Practice on 0238838181 or advice@thevatpractice.

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