TaxAssist Accountants - Businesses look to spread their VAT repayments

Businesses look to spread their VAT repayments

Date: 17th July 2008

More and more accountants are advising their small business clients to spread out their VAT liabilities in a bid to beat the economic slowdown, a new report has suggested.

Website accountancyage.com reported that a growing number of advisors were claiming that businesses were looking to mitigate the effects of the economic slowdown by trying to spread out their VAT liability.

It suggested that more small businesses are trying to ask HM Revenue & Customs for time to pay agreements as these can relieve financial pressure by letting the company pay their quarterly VAT bills in instalments.

One accountant, Paddy Behan, explained to the site: "The word on the grapevine is that there has been a huge upsurge in the number of businesses setting up these arrangements."

PriceWaterhouseCoopers tax partner Stephen Coleclough added that it was in the interest of both the business and the government that flexible VAT repayment schemes were put in place.

"In the current environment it is better for people to go to the taxman and say, 'We have a temporary cashflow problem'," he told the site.

"From the Revenue's perspective these arrangements make sense because they will lose a whole income stream from VAT, PAYE, etc if the business collapses."

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Questions & Answers

Refund Of Reclaimed VAT

Q: Last year we refurbished the kitchen in a small café business we run and reclaimed the VAT on the work done. The business has now decreased to an extent where we can deregister for VAT. If we deregister will we have to refund the VAT claimed on the refurbishment?

The answer can be found in our Questions and Answers section.

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