VAT is charged on most goods and services that VAT-registered businesses provide. VAT registration becomes mandatory when a business’s taxable turnover surpasses the VAT threshold.

This system includes charging VAT on sales (output tax) and reclaiming VAT on purchases (input tax). The balance of these amounts is what businesses pay to, or reclaim from, HMRC.

Accounting for VAT can be complex and time-consuming, which is why businesses large and small turn to professional VAT accountants for help.
Equipped with professional outsourced VAT accounting assistance, you can master VAT and unlock numerous benefits for your business, from reducing costs to enhancing accuracy.

Let’s break down the ins and outs of VAT and explore why expert VAT management is a smart move.

Why outsource VAT accounting?

Put simply, outsourcing VAT accounting removes the headache of dealing with VAT in-house, which offers clear advantages.

1. Cost savings

Outsourcing VAT accounting to external experts is often more budget-friendly than maintaining an in-house team for several reasons.

Firstly, specialists bring efficiency and speed from focused experience, reducing the time (and therefore cost) needed to manage VAT affairs.

They’ll ensure you’re not accidentally missing (or gaining) anything from your VAT accounting processes, keeping your business on the right side of HMRC.

External VAT services also scale with your business needs, ensuring you’re not overpaying for surplus internal resources during quieter periods.

VAT regulations are complex and subject to frequent changes, making compliance a moving target.

2. Focus on your core business

By outsourcing VAT accounting, businesses can reallocate internal resources and focus on areas that drive growth and operational success.

Outsourcing administrative functions such as VAT accounting allows your team to concentrate on core competencies, whether that’s product development, customer service or market expansion.

It also reduces the burden on your team, enabling employees to focus on tasks where they excel rather than covering tax duties. And that applies to founders, directors, managers and so on too. Outsource VAT and you’ll free up valuable time.

All in all, confident, expert outsourced VAT services free up mental and operational bandwidth, enabling you and your team to pursue strategic objectives with greater focus and clarity​​​​.

3. Taxable and exempt replies

Understanding the distinction between taxable and exempt supplies is crucial, affecting the ability to reclaim VAT.

Professional outsourced VAT services will help you discern between taxable and exempt supplies and understand different VAT rates for different items and services.

4. Seamless MTD compliance

The Making Tax Digital (MTD) initiative mandates that all VAT-registered businesses maintain digital records and submit VAT returns using MTD-compatible software.

By outsourcing VAT accounting, businesses ensure they fully comply with these requirements without investing in new systems or dealing with extensive staff training.

5. Expertise in VAT scheme selection and management

The tax system offers various VAT schemes designed to simplify VAT accounting for different types of businesses, such as the flat-rate scheme, annual accounting Scheme, and cash accounting scheme.

Each scheme has its own set of rules and benefits.

  • Flat-rate scheme: Ideal for businesses with a turnover of less than £150,000, this scheme simplifies VAT payments by applying a fixed rate to the turnover. Outsourcing to VAT specialists can help businesses determine if this scheme benefits them and ensure accurate fixed-rate application.
  • Annual accounting scheme: This scheme allows businesses to make regular VAT payments throughout the year, aiding in better cashflow management. VAT experts can assist in setting up and managing these payments to optimise cashflow.
  • Cash accounting scheme: Suitable for businesses that wish to pay VAT only when they receive payment from their customers, this scheme can significantly aid in managing cashflow. VAT accounting services can ensure that businesses accurately track and report their VAT obligations as payments are received and made.

Outsourcing VAT accounting ensures businesses choose the most advantageous scheme for their specific circumstances and manage its requirements effectively and efficiently​​.

Summing up

Efficient VAT management is crucial for compliance and business growth – but it’s very time-consuming for you and your team to handle, and hiring in-house VAT accountants can be pricey and lacks scale.

Conversely, outsourcing VAT accounting to experts ensures accuracy and compliance and allows you to focus on your core business activities.
Save time and money while managing VAT confidently with due regard to the law.

To outsource your VAT and experience the full range of associated benefits, contact James Scott to learn more.