Working Capital Management

VAT on expenditure is a cost to businesses, in much the same was as much other expenditure. For the fully taxable, the VAT does get reclaimed for up to four months, but until it is reclaimed it is a cost that has to be carried.

Conversely, VAT on income is a form of short term funding, which will have to be repaid to the Government between one and four months into the future.

The objects of VAT working capital management are to ensure that: -

• VAT on expenditure is carried for the shortest period of time; and
• VAT on income is retained within working capital for the longest period of time.

We work against a defined checklist, designed to identify risks and opportunities, and then work with clients to release the savings.