1. VAT liability - Am I paying too much VAT? This is the starting point of any VAT cash flow review. Quite often 20% VAT is being accounted for on sales that qualify for the zero, reduced rate or are exempt from VAT. VAT wrongly collected and paid, can be claimed back from HMRC for the last 4 years.
2. Flat rate scheme - if your turnover is less than £150,000 you may benefit from one of the flat rate schemes. The percentage is less than the standard VAT rate because it takes into account the fact that you are not reclaiming VAT on your purchases. There is a range of flat rate percentages - the one you use depends on your trade sector.
3. My turnover is too high for cash accounting - is that me snookered? Not necessarily. If you provide services that are on-going, you could issue your customer a request for payment rather than a VAT invoice to delay the point of accounting for VAT until you are paid.
4. Bad debt relief - I'm not getting paid and I can't use cash accounting or bespoke invoicing - that's it this time, isn't it? No, there's bad debt relief. If you have paid over the VAT due on sales to HMRC and your customer has not paid you and if six months have elapsed from the time the customer was due to pay you can recover the VAT back from HMRC. Just remember to give the VAT back to HMRC if your customer subsequently pays you.
5. VAT grouping - Do I have to charge VAT on transactions between connected companies?Normally yes, but if you have companies that are under common control you can form a VAT Group. This eliminates VAT charged on transactions within the VAT group and aids cash flow.
6. Monthly VAT returns - I want my VAT back quicker from HMRC. If you are due to receive regular VAT repayments from HMRC then monthly VAT returns should facilitate a quicker movement of cash back into the business.
7. Partial exemption - I wish I could recover all my VAT... If you have income that is exempt from VAT, then you are 'partially exempt' and normally you cannot recover all your input VAT. The standard method for calculating input tax recovery may be easy to operate - but it may not be the answer. It is possible to agree a special recovery method with HMRC that can facilitate a significantly better recovery rate on your input tax, thus making irrecoverable VAT less of a cost to the business.
8. VAT accruals - I've got a VAT invoice from my supplier - can I recover the VAT now even though I haven't paid? In most situations - absolutely! (although not under cash accounting) You may have a system in place in which invoices are posted only after payment approval. This can delay the recovery of the VAT by up to 3 months (possibly longer). A slight change to internal processes can accelerate the recovery of input VAT. It is also possible to agree an accrual method with HMRC to recover input VAT on invoices not entered into the system due to timing issues.
9. Self-billing - I have regular suppliers who take ages to send me a VAT invoice - anything I can do? You could consider entering into a self-billing agreement with your supplier. This could accelerate input VAT recovery on the goods or services provided. If appropriate you would issue an invoice on your supplier's behalf. This is particularly useful if you know before your supplier what goods or services have been provided by them in a particular period.
10. I import goods from outside the EC - what about the duty & VAT? There are customs duty reliefs or reductions available on various goods imported from outside the EU, particularly on imports from developing countries. Also, if you import or export goods on a temporary basis, there are customs regimes available to minimise the duty & VAT incurred. As a minimum, make sure you have registered with HMRC as an importer so that you can recover the VAT element of your shipments on your VAT return.

These tips come courtesy of Baker Tilly with whom we work on matters relating to tax and VAT.