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Value added tax planning
There are a number of schemes available for companies in Value added tax. In particular this case revolved around whether the client should adopt flat rate or standard. The client in particular wanted to adopt the Flat rate.
In order to forecast the two different costs involved with the schemes it was important to forecast future transactions for the next year. This is because Flat rate VAT works on a rate charged on sales invoices (taking into account the difference allowed in year 1) where as the standard scheme allows you to claim 20% of all allowable purchases against the 20% charged on sales invoices.
By forecasting the predicted sales and expenses we could compare the difference in Tax paid on both VAT schemes. This analysis showed the flat rate would cost around £50 more each month in tax paid against standard rate. This shows the importance of asking a qualified accountant to look at Tax schemes before you commit as it can cost you money if you don't.
The result, the client was advised and adopted the standard VAT scheme which was predicted to save our client £600 throughout the year and allowing us to add value to their business.

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