VAT Planning Advice

Good VAT planning helps businesses manage cash flow and cut down on unnecessary VAT costs. It starts with choosing the right VAT scheme. For example, the Flat Rate Scheme makes calculations easier and is best for low-cost businesses, while the Cash Accounting Scheme is useful for businesses that have longer payment terms from customers. 

Annual Accounting allows one return per year with instalment payments, easing administrative burden. Beyond scheme choice, planning covers managing partial exemption: if you make both taxable and exempt supplies, you must calculate the recoverable proportion of input VAT accurately. Reviewing this annually can yield significant savings.

Another planning area is supply structuring. You can improve VAT recovery by dividing your supplies into standard-rated and zero-rated items. Keep an eye on changes in VAT rules, like new zero-rate or reduced-rate categories, to prevent overpaying. Also, timing your invoices and payments can delay VAT payments, which helps your cash flow in the short term. 

Businesses exporting goods may use the despatch loan system or deferred accounting for import VAT. Regular consultation with knowledgeable advisers ensures your VAT planning adapts to evolving rules, minimises risk and supports long-term financial health.