What is the impact of deficient VAT knowledge?


Is a lack of VAT knowledge, skills and support the biggest VAT risk area for businesses?

In researching our recently published Whitepaper on the SAO regime, it was quite apparent that the main area of concern for management-level finance professionals was VAT.



Source: “How are companies preparing for the new Senior Accounting Officer requirements? Survey compiled by PricewaterhouseCooper LLP.


This is probably due to the transactional nature of VAT and the fact that in most cases there is little high-level visibility of the units responsible for taking decisions on the tax treatment of the transactions. We have found that it is becoming ever more salient that VAT needs to align with day-to-day business; with business becoming more complex the VAT position becomes correspondingly complex.

For many businesses, too often the key VAT decisions are made by those people having no real business alignment or who are not sufficiently aware of the consequences of their VAT decisions. This lack of business and VAT alignment is exacerbated by the fact that those people do not possess the requisite VAT knowledge.

It is important to recognise that the SAO regulations cover the entire process from data input to compilation of the final VAT Returns. Whilst the latter tends to be performed within the tax function by people with a good degree of tax knowledge, many of the earlier tasks in the process, such as coding postings to the accounts and determining the VAT status of products, services and customer accounts on the business’ systems, are carried out by non-tax qualified staff. It follows that surely these earlier stages are where the largest amount of VAT risk lies?

However, only some businesses are actively recognising this potential VAT risk area. From our research and in talking with senior tax and finance professionals, we are asking what processes and strategy is in place to ensure staff performing tax accounting duties actually have the necessary tools and knowledge to enable them to perform their job accurately?

Currently, many large businesses do not have the processes or capabilities to identify and quantify VAT knowledge amongst staff. This challenge is heightened where those making VAT related decisions are in geographically dispersed locations. This can be exacerbated by a high staff turnover in key business functions such as Accounts Payable and Accounts Receivable where there new staff are not thoroughly trained or provided with a structured support system.

For there is a very real issue in respect of VAT knowledge continuity and how to ensure that staff leaving the business do not create a knowledge vacuum whereby the exiting staff take all of the knowledge with them and the new staff do not have the necessary skills to do the job properly. Finding a solution to knowledge and skill transition will be crucial to best practice for businesses.

To help businesses gain visibility of potential knowledge gaps, we have developed a free online ‘VAT Knowledge Assessment’ tool. Our ‘VAT Knowledge Assessment’ has been designed to capture current VAT knowledge within businesses, specific to job roles and functions interacting with VAT. The assessment comprises questions based on the essential VAT information every staff member interacting with VAT should know in order for them to perform effectively with reduced VAT risk.

The VAT Knowledge Assessment takes each staff member approximately 20 minutes to complete and is submitted online. Once a ‘team’ (i.e. staff members in your business) undertake their free online VAT assessment, their responses will be reviewed by our team of international VAT consultants. Their submissions will be analysed and compiled in to a comprehensive Report that will provide feedback so that VAT knowledge gaps will be pinpointed, VAT risks factored and potential problem areas highlighted.

Both the online VAT knowledge assessment and the feedback report are free – just fill in the form and receive an email link to the online VAT Knowledge Assessment. Once you have the link, feel free to distribute the link to staff members.

If you want to get started on our VAT Knowledge Assessment, you can start the process here.

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