VAT should not be a burden to companies: it is a tax on consumers that happens to be collected by businesses.

Unfortunately, VAT obligations can often create cash flow issues for firms trading cross-border and consequently it is important to take steps to minimise any impact.

Last year, a leading distribution business dealing in raw materials (iron, steel and magnesium), contacted us and asked to be provided with a competitive proposal for specialist VAT advice.

The business was being advised by a consultant, but the company had independently identified that current processes were not optimised and that there were negative cash flow consequences. They were also concerned about being exposed to a level of risk that they were uncomfortable with and which they wanted to reduce.

Supply Chain Analysis

After reviewing the client’s existing compliance structure and some of its supply chains we took over the management of its Spanish VAT registration from their previous provider. Accordance also helped the business to obtain two further VAT registrations in other EU Member States, the need for which were identified during our initial review work.

These actions allowed the client to move the responsibility for VAT compliance management to a specialist VAT practice, Accordance. This one action instantly gave them more visibility on their VAT position across multiple jurisdictions and also meant that risk could be much more readily controlled and managed.

Adding value

Finally, we also advised our client to become part of the voluntary Special Monthly Refund Register (REDEME) regime in Spain which allows for qualifying businesses to obtain VAT refunds on a monthly basis (as opposed to annually). This had a very positive impact on reducing cash-flow blockages which then led to the effect of freeing up cash to be invested in the business itself.