How we helped our client achieve cost savings through VAT compliance
For most firms, outsourcing is merely a strategy to cut costs and improve operational efficiency. However, the most overlooked aspect of outsourcing is that it gives companies access to a highly-talented set of individuals and ensures industry best practices. At Sundaram Business Services, we cater to bookkeeping services such as Accounts Receivable, Accounts Payable, Bank recon and VAT computation. But when we receive a job from our client, we view it as more than just a transactional task and strive to go beyond the minimum requirement to add value to our clients.
Here is one such example of how our team delivered exceptional results for our client through our compliance and efficiency-driven process.
Our client is a leading 3 Partner firm based out of Kent, U.K. The firm has a wide variety of clientele that ranges from startups to large corporations.
Our partnership with the client
Since 2014, we have partnered with our client for a gamut of Bookkeeping and Accounts preparation services. Our services are designed to help increase productivity for the client while completing processes in a timely manner. This has made us an integral part of our client’s team. They see us as an extended office.
Nature of the job
In 2018, we received a routine accounting job from our client for completing the monthly accounts. As always, we took the extra effort to go beyond just the specified requirements.
The client expectation is to process the bookkeeping and compute VAT.
Our approach – Value addition
- Our client provided us with all the relevant source documents required to compute Bookkeeping and VAT.
- Once we receive the documents, we validated all the information to check for accuracy and relevancy:
- Usually, the VAT and the company’s registration date are the same, but while analysing our client’s accounts we identified a deviation.
- The firm’s date of incorporation was 8 months prior to the date the VAT was registered.
- We conducted in-depth research into the VAT provisions listed on the HMRC website. This helped us identify a crucial process in computing our client’s VAT as per their expectations.
- We found that we could backdate the claims for VAT paid before the VAT registration date. This allowed us to claim back the VAT input which would be considered a recovery from the HMRC.
- We explained the process to our client who suggested some refinements to the existing procedure.
- Once the changes were incorporated, we backdated the claim and computed the VAT liability.
The procedure we identified for computing the VAT resulted in numerous benefits.
- Backdating the VAT claim resulted in cost savings for the end client amounting to ~£ 2.7k, which has a direct impact on the cash flow.
- The process allowed us to report the accurate numbers for accounting purposes while adhering to VAT compliance requirements.
- Our client had the added benefit of being better positioned with the end-client due to the recommended cost savings.
Through our diligent and comprehensive process, we were able to add value to our client by identifying a process for VAT compliance and tax savings.