High Income and Low VAT Inputs

A company i am involved with has Gross Profit of over £30,000 per month.

There are very few VAT Inputs so the Quarterly VAT bill is looking high.

What can be done if anything to mitigate this?

Also, in turn the YE Net Profit figure are looking high for tax purposes.

There are 5 directors (20% each), would increasing dividends paid during the year reduce tax or are there other things to be considered?


  • T.C.
    T.C. Registered, Tutor Posts: 1,448
    Have you looked at a flat rate scheme for VAT?
  • JodieR
    JodieR Registered Posts: 1,002
    Flat rate VAT wouldn't be an option if the turnover was that high.
    And no, paying dividends would have no effect on corporation tax or VAT. It could affect the directors' personal tax though.
  • Jawz
    Jawz Registered Posts: 53 Regular contributor ⭐ ? ⭐
    JodieR is right Flat rate wouldn't apply if the company's turnover(vat inclusive) is less that £150 and they can stay on the scheme so long as turnover does not exceeds £230k in the last 12 months.

    Are they on the cash accounting scheme? The cash scheme wouldn't reduce VAT to be paid but the company will only pay VAT on sales invoices that have actually been paid and likewise claim Input VAT on purchases that have been paid, otherwise I would say-tell your client to bite the bullet and pay the VAT due. Good luck
  • villapb
    villapb Registered Posts: 357
    Tell them to be thankful they have that problem....................many out there cant pay the vat due to no money in bank....
  • villapb
    villapb Registered Posts: 357
    I am working on vats this week and just thought about your post Anthony.....

    We look at the trends on past returns and look for consistency using trend analysis.

    If the future returns start to look different it could trigger a vat inspection visit so you have to be spot on with any changes and have evidence, "basically cover your arse".............
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