Value Added Tax (VAT)

VAT is collected on business transactions, inputs and acquisitions. E3 Consulting can help identify savings on VAT which are often missed.


A Potential Minefield

VAT on property and construction is a significant area of business risk. Large sums are involved, the rules are complex and ever-changing, and HM Revenue and Customs' approach is not always predictable. VAT is sometimes seen as simply ‘washing through’ the business, rather than as sticking as a cost. Even where this is true – and often it is not – steps still need to be taken to make it so.

The issues also need to be addressed early – if an election, notification or warranty is needed, it is required in advance of the transaction. Errors, or false assumptions, cannot readily be corrected after the event.

Area of Opportunity

VAT is also an area of opportunity. The era of aggressive planning schemes may be over, but there are important reliefs as well as dangerous traps, and there is much to be gained by identifying these, and making sure that you qualify for them. Project costs can be reduced by removing a VAT charge, by ensuring that you can recover VAT you do pay, and by managing VAT cashflow. But much depends on the detail, and you can never assume that what worked last time will work again.

At a rate of 20%, VAT can turn an expected profit to a thumping loss, or a marginal project to a highly rewarding one.

So the moral is simple – check out the position, and take advice.

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