We know that VAT should not burden companies; it is important to realize that it’s a tax on consumers that businesses happen to collect. Nevertheless, VAT obligations can often create cash flow issues for firms trading cross-border. So it’s important to take steps to minimise any impact to continue to trade with confidence.
We have extensive experience in helping businesses resolve cash flow issues through VAT compliance. For this reason, a leading distribution business that deals in raw materials (iron, steel and magnesium) contacted us. We provided a competitive proposal for specialist VAT advice.
Prior to contacting us, the business received advice from an independent consultant. However, the company 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.
Finally, we also advised our client to become part of the voluntary Special Monthly Refund Register (REDEME) regime in Spain. Qualifying businesses can obtain VAT refunds on a monthly basis (as opposed to annually). This reduces cash-flow blockages as a result. This then led to the effect of freeing up cash that the businesses invested in itself.
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