Paying your VAT bill may not be at the top of your strategic to-do list when it comes to planning and long-term financial goals. But with Christmas now behind us, receiving timely VAT advice can be a real life-saver if you're a cash-poor business to business (B2B).
Slow Christmas trading and the pressure of tax bills
December trading makes for a slow month for many businesses – particularly those that don’t have the seasonal peak of consumer-driven Christmas sales to offset this December downturn in sales, income and quarterly profits.
Those that experienced this seasonal dip will have less revenue coming in but will, typically, have the same outgoings. So, there’s less cash in the pot to cover salaries, rent and other operational overheads incurred by the business, resulting in a tough few months ahead.
This slowdown in revenue can have serious repercussions on the businesses ability to pay upcoming corporation tax (CT) and value-added tax (VAT) bills.
CT and VAT cycle
The chart below illustrates the regular annual CT and quarterly VAT cycles across the year for the majority of SMEs paying on a quarterly basis. The tax year-ends are mapped across the vertical axis and the months when CT/VAT payments are due on the horizontal.