Some helpful tips regarding VAT, which may help improve your cash-flow:
1. Are you currently accounting for VAT on the invoice basis?
This means you pay VAT based on the date of your sales invoices. This is the standard way most businesses account for VAT. However there is a second option called the cash receipts basis, which means you pay VAT based on the date you get paid by your customers. Traditionally this basis has just been used by cash businesses such as retailers, publicans etc. However any business who has turnover of less than €1m can apply to account for VAT on this basis. Most businesses today are waiting a long time to get paid by their customers so a change to the cash receipts basis may ease the cash flow burden.
2. Did you know if your bi monthly VAT bill is less than €50,000 you can opt for a monthly direct debit scheme and file one annual VAT return? This will save you money with regard to administration time involved in preparing VAT returns as well as smooth the liability evenly over the year so that you can plan and manage cash flow more effectively.
3. Have you experienced any bad debts? If so and you account for VAT on the invoice basis remember to claim a refund of this VAT paid.
4. If you are setting up a new business, register for VAT early. You can register for VAT before you start to generate sales. If you are not registered you cannot claim VAT on costs incurred pre- commencement of your trade.
5. Filing your return on ROS will give you an extra 5 days to file and pay your VAT liability. Returns are due 23rd of month versus 19th of month for paper filing.
6. If you are in a VAT refund position remember to file early.