VAT should not burden companies: it is a tax on consumers that businesses happen to collect.
Unfortunately, VAT obligations can often create cash flow issues for firms trading cross-border. Consequently it is important to take steps to minimise any impact.
A leading distribution business dealing in raw materials (iron, steel and magnesium) contacted us.
They asked for a competitive proposal for specialist VAT advice.
The business was taking advice from a consultant. However the company independently identified that current processes were not optimised. As a result, there were negative cash flow consequences. They were also concerned about exposure to a high level of risk that 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. We identified the need for which 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. It also meant that risk is more readily controlled and managed.
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 positively impact on reducing cash-flow blockages. This then led to the effect of freeing up cash that the businesses invested in itself.
Need more information on VAT and cash flow? Contact our VAT experts.