VAT can be difficult to get right, especially when companies are trading across several EU Member States and dealing in complex goods and services.
The fundamental issue is to make sure that transactions have been correctly understood from a VAT perspective before starting to report to tax authorities. Tax authorities are desperate for revenue: taking the time to assess new transactions and newly established supply chains should save fines, penalties and long-term compliance costs. Companies should also ensure that they have a mechanism for checking and reviewing VAT treatments when business flows change.
A leading business operating in the oil industry contacted us for specialised VAT advice. The company was operating in several EU countries, undertaking projects such as transporting products, installing equipment and buying and selling products. It had already obtained three VAT registrations and separate local providers were managing the VAT compliance obligations in these countries. As a result, no one party had full visibility of the client’s overall VAT position which left our client exposed to risk that they wanted to minimise.
Accordance undertook a full VAT transaction analysis review which involved looking at the supply chains from beginning to end and mapping these to provide transparency on what was happening. Once this work was complete we then provided a transaction matrix that cross-referenced those maps, so that the company’s activities and related VAT treatments/obligations could be easily identified. This information was then used to make sure that the correct tax codes were being used in the client’s ERP system. In addition to this consultancy work, we took over the management of the three VAT registrations from the previous providers. Accordance is also in the process of obtaining a further three VAT registrations for the company that were identified as part of the consulting project.
By having one VAT provider that could review and manage VAT positions across the EU, our client was at last able to understand all its current compliance obligations and have visibility and control over their activities. This has helped to streamline its compliance processes (which has led to lower costs) and also reduce risk across the spectrum of their activities.