Examples of areas of potential VAT savings

Many businesses can benefit from significant VAT savings, if structured correctly. Our aim is always to ensure that the VAT exposure of any business or organisation is kept to an absolute minimum, within the framework of the law. Examples of just some of the areas where we have been of assistance are as follows:

Partial Exemption

Any business which receives any exempt income is termed partially exempt. This is likely to have a direct effect upon the amount of VAT which the business can recover. Businesses commonly found to be partially exempt include car dealers, charities, opticians and property companies, including any business with incidental property letting.

We can carry out the complex calculations required by any partially exempt business and, if the result is not favourable, we can also recommend special methods to calculate the amount of recoverable VAT, to maximise recovery. This can save significant amounts of money.

As a Tour Operator, you account for VAT based on your profit margin under the "Tour Operators Margin Scheme". This scheme affects many coach tour operators, hotels and practically any companies arranging tours. If you restructure your business and introduce an associated company, a saving of nearly all the VAT can be achieved.

This is the most complex area of VAT, and one where in-depth expertise is essential. The VAT liability on a property sale can depend on its age, type, and whether or not the seller chooses to tax the property. If you are selling any property, you need to take full account of VAT and stamp duty implications, including whether the sale of a property could have an impact on the VAT you have recovered during the previous 10 years.

When buying a property, you need to consider the intended use of the premises. This affects your right to recover, or not recover, any VAT on the purchase price. Finally, property letting (including surrenders and assignments of leases) has potentially even more pitfalls for the unwary or inexperienced.

Printed Material

If you are a partially exempt business and you produce free literature for clients then you can potentially save VAT on production of that literature. This scheme is particularly relevant to Colleges issuing a prospectus, Insurance Companies and Stockbrokers.

VAT is a big cost to most charities. Furthermore, VAT is an added and unwelcome complexity, often requiring, not only partial exemption calculations, but also business/non business apportionments. On a positive note, it is these complexities which give us the opportunity for VAT planning, to keep the VAT costs of these highly worthwhile organisations to a minimum. Any charity suffering high or exceptional VAT costs should seek advice at an early stage.