Client care VAT reviews: Is the time right for your clients to take the next step in cost reduction?

Wednesday, December 7, 2011

by Nick Ryan

No business wants to incur a cost to highlight a problem that could trigger a bigger cost BUT neither does a business want to lose the opportunity of reducing its costs and perhaps improving its bottom line profit.
Most businesses assume an audit is a “catches all” tool that ticks all the boxes and it is difficult for accountants to persuade them otherwise.
Our client care reviews can operate as an integral part of the audit approach and provide for that added value of comfort, an opportunity to identify potential savings for the client both retrospectively and for the future.
Why complete the review?
A key objective for all businesses is cost reduction in order to maximise profit yet recent surveys have identified that less than 20% of businesses consider VAT, a key component cost for most businesses, as part of the overall objectives in formulating a Strategy and have performance measures and goals set for the management and control of VAT.
The surveys also show that those businesses that do manage their VAT still experience a potential error count of circa 10% of their VAT throughput even with managed controls in place. Therefore a business with a €5m turnover and €450k VAT throughput has a potential VAT error, excluding penalties and interest, of €45k per annum. If this goes unchecked and is identified by Revenue then this could result in a six figure cost including penalties and interest to the business, excluding the additional costs in managing the process.
Just consider what the possible impact to a business would be were that business does not fall into the 20% category, potentially crippling.
Interestingly, the majority of errors identified can be caused by the simplest of mistakes within the management and control process.
Key objectives of the review:
• To identify opportunities which can improve the management processes for VAT
• To highlight areas of concern and shortfalls together with the remedies required to correct them.
• To develop the business’ focus to become VAT efficient.
• To reduce a business’ overall cost and level of risk thereby enhancing their bottom line profit.
Benefits for your client:
The review can provide a business with the kick start required to formulate and implement a clear VAT strategy to support its overall strategy and meet its targets.
By doing so, a business, through the implementation of a clear VAT strategy together with performance goals on the management of VAT can:
• Improve cash flow.
• Reduce costs.
• Improve business processes.
• Enhance bottom line profit.
Why use the VAT Practice
We are an independent practice providing a range of boutique VAT services. Our focus for these reviews is to assist businesses in developing a focused approach to VAT and in ensuring VAT becomes a business “deliverable”. A secondary aim is assist a business in strengthening their VAT management controls and improving performance in the management and control of VAT. The reviews are not there to identify specific errors requiring disclosure. We have 20 years experience in advising businesses on Irish, UK and international VAT issues. We offer a competitive and value driven fee structure together with a business driven service focusing on a timely completion of the Clinic and submission of our Findings report.
What actions should you take now?
When looking at your business you should consider the following questions:
Does your business have a VAT deliverable as part of its strategy? Are their identifiable performance goals for the management and control of VAT by your business? How confident are you that your business is VAT compliant and efficient?
If the answer to the above questions is largely “No” or “Not sure” then.. Contact us on to discuss how we can help you and let the review be your first step.

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