How to turn VAT into value for your business

When most people hear “VAT,” their first thought is usually a frustrating tax that just complicates life. But here’s the truth, VAT doesn’t have to be a burden. In fact, when handled well, you can actually turn VAT into value for your business.

At Future Cloud, we help businesses not just stay compliant with VAT but use it to their advantage. Here’s how you can too.

VAT (Value Added Tax) is a tax on goods and services. Businesses collect it on behalf of HMRC when they sell something, and they also pay it when buying goods or services from others.

If you’re VAT registered, you charge VAT to your customers (output VAT), and you reclaim VAT on your business purchases (input VAT).

Many businesses miss out on thousands of pounds by not reclaiming VAT properly. Whether it’s expenses, software, fuel, or office equipment, if it’s a legitimate business cost and has VAT on the invoice, you can usually reclaim it.

We often see:

• Missed claims on mileage and travel expenses
• Not claiming VAT on business use of mobile phones
• Overlooking VAT on subscriptions or training courses

Top Tip – Keep detailed, VAT-friendly records and ask your accountant to review what you’re claiming or not claiming! (We can do this for you).

Did you know there’s more than one way to do VAT? Depending on your size and type of business, HMRC offers several schemes that can actually save you time and money.

Here are the main options:

• Flat Rate Scheme – You pay a fixed rate of VAT and keep the difference. Great for small businesses with low costs.
• Cash Accounting Scheme – Pay VAT only when you get paid (not when you invoice). Brilliant for improving cash flow.
• Annual Accounting Scheme – File one VAT return a year and make advance payments. Less admin, more predictability.

Not sure what’s best? We can help you choose the most cost-effective option for your business.

VAT isn’t just a compliance task, it’s a powerful tool when it comes to pricing strategy and cash flow planning.

• Pricing – Make sure you’re clear about whether your prices are VAT-inclusive or exclusive. Transparency avoids surprises for customers and keeps your margins on track.
• Cash Flow – Know your VAT deadlines and set funds aside in advance. Timing major purchases just before a VAT return can help you reclaim VAT sooner.

Strategic planning means fewer cash flow surprises and more money in your business when you need it.

Making Tax Digital (MTD) means all VAT-registered businesses must use approved software to file VAT returns.

But beyond compliance, cloud accounting software like Xero and QuickBooks can:

• Automatically calculate VAT
• Track expenses with a snap of a photo
• Give real-time reports so you’re never guessing

At Future Cloud, we’re experts in cloud accounting software and we’ll help you make the switch (if you haven’t already) with zero stress.

VAT can be complicated, especially when it comes to international sales, partial exemption, or property transactions. But mistakes can be costly. That’s where we come in.

Working with an experienced accountant will:

• Make sure you’re claiming everything you should
• Keep you compliant and penalty-free
• Help you choose the best VAT scheme
• Find ways to reduce admin and improve cash flow

In short, we help you turn VAT into value and a business advantage.

VAT is more than just a tax, it’s a tool. With the right advice, systems, and planning, you can make it work for your business, not against it.

Need a hand? We’re here to help.

Whether you’re just getting VAT-registered or want to review your current setup, get in touch with our forward-thinking, friendly team at Future Cloud.

Let’s turn VAT into value together.

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