How to obtain cashflow savings

How to obtain cashflow savings

How to obtain cashflow savings


Every three months you have to pay the VAT return and when money is tight this can be difficult.  Should you visit your bank manager and ask for an extension to your overdraft or are there any other things you can do to improve your cashflow?


Sounds simple.  The are two basic things you can do to improve your cashflow when accounting for VAT, delay the payment of output VAT and speedup the reclaiming of input VAT.  Sounds simple but how exactly can you do this?

Delay paying output VAT.  There are a number of things that a business can do to delay the payment of output VAT quite legally:

If your turnover is under £1,350,000 per annum you can go onto cash accounting.  Using this scheme you only need to account for output VAT after you have been paid.

If you make continuous supplies of services (accountant, lawyers etc) instead of issuing a tax invoice you can issue a request for payment.  This does not create a tax point and you will only need to account for VAT when you are paid.  Don’t forget to issue a proper tax invoice when you are paid.

Under the tax point rules you have to issue your invoice within 14 days of the basic tax point (date of supply).  This creates an actual tax point on the date the invoice is issued, so if it spans the end of a VAT period you can defer paying the output tax by three months.

If you import goods you could consider setting up a duty deferment account with HMRC.  This could delay paying import VAT by up to 45 days.

Speed up input VAT repayment.   How can I get that VAT back quicker?

Input tax accruals – the right to claim back input VAT arises when the VAT was charged, the tax point.  The vast majority of businesses post purchase invoices onto their accounting systems only once they have been approved for payment.  Therefore, at the end a VAT period there can be a number of invoices dated within the period but not yet entered into the accounting system and the VAT not claimed.  You can make a manual accrual of this input VAT without asking HMRC’s permission, but don’t forget to adjust it on your computer system at the end of the next period so that you don’t claim it twice.

Don’t overlook making a bad debt relief claim if a debt is six months past the due date for payment.

If you have a company that receives property rental income you will normally bill it at the end of each calendar quarter.  If this is the case make sure your VAT returns end February, May, August and November as will gain two months use of the VAT before paying to HMRC.

If you have a number of associated companies and they make supplies to each other, or you have parent company making management charges you could take a look at you VAT return staggers to make sure that you can claim back the input VAT in one company before you have to account for the output VAT in the other. 


VAT Specialists Limited is headed by Chartered Tax Adviser Andrew Needham who has a degree in Law from UCNW Bangor and is a specialist in indirect taxes. Andrew has over 20 years experience in VAT…

Marketing & PR

SEO Explained and Why Your Business Needs It!

Are you passionate about making your business a success online? Are you looking to gain more enquiries/sales? Then…
Retail & Services

A time for rebooting US

A quick post at the end of the week to say "well done" to each and every one of us.  I guess that whether you feel…
Financial Services

The Price of Government Support During COVID 19

Most people would applaud the UK Government's willingness to step in and assist the business community with the various…

More Articles

Retail & Services

Looking after our pennies and our planet

Most people in the world would love to have more money in their lives.  There are a growing number of people who are…

Savings Case Study

Background Our client had a repeat order for an external fence banner that had been produced on a number of occasions…
Training and Development

The advantages of advancing years.

Many job seekers, as their years advance, become ever more concerned about their age and fear this will have a negative…

Would you like to promote an article ?

Post articles and opinions on Manchester Professionals to attract new clients and referrals. Feature in newsletters.
Join for free today and upload your articles for new contacts to read and enquire further.

Find the right professionals in Manchester

View The Full Index

Search By:

Submit your Enquiry here

Enquiry Details

Contact Details