Since getting out and about recently and doing my networking, it has become quite clear to me that most people don’t know what a VAT consultant does. When I tell people I’m a VAT consultant, their usual reply is “oh well my accountant does my VAT for me”. And I’m sure he or she does, and very well too.

Finding the best analogy…

Now the best way I can explain the distinction is to think about the difference between your GP and a consultant. God forbid you get a serious illness such as cancer or MS, but if you do, your GP will refer you to a consultant and administer drugs and treatment as prescribed by the consultant. Similarly you wouldn’t expect your family solicitor to represent you at court if you were accused of a serious crime – you’d expect the solicitor to find you a good Q.C.

Not that I’m comparing myself to a Q.C. or likening VAT issues to serious illnesses, but it’s a useful analogy. I’m not an accountant and I hate doing VAT returns although I will do them at a push (including my own of course!). Most of the work I do is in conjunction with accountants or other professionals and in fact the majority of work I have done over the years has been working with accountants to find solutions to their clients’ VAT problems.

I sometimes think that people expect an awful lot of their accountants. It’s a bit like expecting your general builder to do the plumbing and electric work as well as building your house. You wouldn’t – you’d want the electrics done by a qualified electrician! And accountants know when to call the specialists in as well.

So what exactly does a VAT consultant do then?

Being a VAT consultant is more like being a solicitor in than being an accountant. I’m more likely to be looking at VAT legislation or other material to find out how the VAT rules work than doing the figure work.

A good example of the sort of work I do came up last week. An old colleague had asked me for some suggestions about how to calculate her clients’ VAT bill – it’s a small retail business selling both standard and zero rated items.

Her initial thought had been to use the Flat Rate Scheme and she was considering using a scheme which would have given her client an overall VAT rate of 10.5%.

What she hadn’t considered were the VAT retail schemes which provide a whole range of different ways of calculating VAT for retailers. By using these schemes, I came up with an approach which would reduce her clients’ VAT rate down by as much as 80%, ie an overall VAT rate of around 2 or 3%. This is quite simply by using the proper scheme for the business – not using any loopholes.

Savings not guaranteed but I can add value…

Now I hasten to add that these were “back of the envelope” figures and once we’ve worked out the detailed figures, I suspect that the resulting rate will be somewhere between 2% and 10.5%. But the point is that however good your accountant is at being an accountant, chances are that I know more about VAT than they do. My old colleague is an extremely good accountant with a good general knowledge of VAT issues and how they affect her clients’ businesses. But she needed to be reminded of the retail schemes.

The relationship has been beneficial to her business as well as her clients. First, she has saved money for her client which more than cover the costs, not just now but in the future as well. And second, from what she herself has learnt from this situation. When she has similar queries with retail clients in the future, she will know how to find the best result herself.

This might seem like bad business for me as I’ve given her some of my professional knowledge, but in fact it’s quite the opposite. Yes, it probably does mean that if she has a similar issue in the future, she’ll do most of the work herself and only ask me to confirm her findings. But in the longer term, she knows that I can add value to her clients’ businesses which means that she will refer other VAT issues to me and – more importantly – recommend me to other accountants.

I’m not telling you this to blow my own trumpet, it’s simply to explain what I do and how I work in conjunction with accountants and other professionals. And as I’m not an accountant, she is giving me some very good accounting advice, for which I am very grateful! Double entry book-keeping has always done my head in!

Knowing when to get the specialist in

Over the years I’ve advised on a whole range of business issues – from property transactions to imports and exports and supply chain logistics to mergers and acquisitions and insolvencies, and advised businesses from sectors as diverse as charities and finance and insurance. In about 90% of the cases, I’ve been brought in by the accountant – whether the businesses’ F.D. or the local accountancy firm who prepares annual accounts for the business.

The VAT issues can be just as complicated for a small business as for a large business so the accountants themselves have different ways of working and when to ask for advice. Some accountants are great at VAT retail schemes and some are great at VAT and property issues, but few will have the breadth and depth of VAT issues as professional VAT consultants. The important factor is that the accountants still do most of the work, but know when they need specialist advice from someone such as myself.

Unfortunately I can’t guarantee to find savings in all, or even most cases. Sometimes I find that the business has been underpaying VAT and have to help them disclose the error to HMRC. But what I can do is to find the right answer at the minimum cost to the business and that’s where I can add value for you and, if you are an accountant, on your clients’ VAT issues.