How much does managing VAT cost your business?

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 Toerag 23 Jul 2021

Where I live we don't have VAT or GST (goods and services tax), but there's calls to introduce it. Many people say it will be costly to implement, but just how much does it cost a business to deal with in terms of time or money? How much is / can be automated?

 olddirtydoggy 23 Jul 2021
In reply to Toerag:

Depends on the size of the business and the model. Accountants will charge more and the admin will increase a fair bit. I use a couple of tricks, well within the law to keep me below the threshold to keep it all nice and simple.

 David Lanceley 23 Jul 2021
In reply to Toerag:

Very little in addition to the usual accounting stuff particularly if you run a simple accounting package which will do all the VAT / GST calculations for you including (in the UK) submitting your return.  You're punching in all the transaction data anyway but I guess an added complication.

A bigger consideration is what effect it might have on your prices and competitiveness

 jimtitt 23 Jul 2021
In reply to Toerag:

Depends if your books have to be done by an accountant or not. In Germany the VAT must be and costs 3-500€ for a turnover of ca 100,000€.

For me they are a reasonable time-consumer as I export a lot so have to do more paperwork to account for it/recalculate the incoicing though I guess I could automate it a bit. + when it's tax time finding all the bits of paper.

Crap is stuff like the VAT ( on the postage) varies on the weight of a parcel doesn't help! Also over 10,000€ to a single EU country in a year has to be accounted differently but I'll let my accountant worry about that.

OP Toerag 23 Jul 2021
In reply to jimtitt:

Is that 3-500E purely for the VAT part, or for the accountant to do the accounts in general?

OP Toerag 23 Jul 2021
In reply to David Lanceley:

> Very little in addition to the usual accounting stuff particularly if you run a simple accounting package which will do all the VAT / GST calculations for you including (in the UK) submitting your return.  You're punching in all the transaction data anyway but I guess an added complication.

That's what I thought. The only onerous task would be putting something in your system to denote whether a particular product is tax exempt or not, and once that's done its done for all subsequent transactions.

 David Lanceley 23 Jul 2021
In reply to Toerag:

> That's what I thought. The only onerous task would be putting something in your system to denote whether a particular product is tax exempt or not, and once that's done its done for all subsequent transactions.

Yes, even the simplest of packages will allow you to set a VAT code for each cost code (or product) so could be exempt, zero rated or standard rated or possibly partial VAT / GST.  After the initial coding the package does all the calculating of input / output VAT / GST and tells you how much to pay or reclaim.

 jimtitt 23 Jul 2021
In reply to Toerag:

The VAT part.

 neilh 23 Jul 2021
In reply to Toerag:

Depends how digital your accounts reporting is to your the equivalent of HMRC imho.UKGOV has make big strides to go digital .

It is so easy now with HMRC with live reporting etc and with the right software pretty straight forward.

There again I do not adopt any shady business practises and t I have plenty of cash flowing through the business so that side of it does not cause me any issues.

Businesses that are on the breadline with very tight margins and poor cash flow .....thats a different prospect. For some business even say a monthly SAGE cost of a few hundred £s will cause problems.


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