As part of my work I became involved in advising many businesses from outside my firm's normal client base on VAT matters. I also provide VAT services to other firms of accountants throughout West Yorkshire and beyond.
Now and again, I come across weird and wonderful examples of bizarre VAT accounting. Here is one example.
It concerns an accounting firm which struck up a deal to provide accounting services to selected clients - for a term of 50 years at a cost of £2m plus VAT. By taking advantage of the cash accounting regulations the firm hoped to help each client to a £350,000 VAT claim. The accounting firm would only account for VAT to Customs & Excise on the payments actually received which would be spread over many years. A change to the cash accounting regulations introduced last year would seem to have scuppered this arrangement.
The VAT system lends itself to many types of sensible, straightforward VAT planning and anyone unsure of their rights and responsibilities is recommended to seek professional advice.
Terry Parkinson is a VAT Partner with BKR Haines Watts Chartered Accountants.
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