Is there a way my business can operate to pay less VAT?
Quite often there is, as the VAT consequences will often be different for different ways of working. This is because VAT is levied on supplies of goods or services rather than profits. If the nature or value of the supply changes there is a good chance the VAT treatment will also change.
Nobody can dictate how a business operates provided it remains within the law. HMRC pay close scrutiny to changes that they consider to be "contrived and artificial" and aimed exclusively at reducing the VAT payable. This is what they describe as tax avoidance. If HMRC suspect tax avoidance, and there is sufficient tax at stake you can expect them to give you a hard time.
If a business changes how it operates for sound commercial reasons and the tax consequences change HMRC will accept that this is fair game. But they will still ask questions. The onus is on the taxpayer to convince HMRC that there are sound business reasons for the change.
There is a grey area between tax avoidance and sound business rationale called legitimate tax planning. Nobody in HMRC has managed to define this.
Roly's experience as a tax avoidance officer makes him familiar with what HMRC will accept and what they will take exception to. If you would like to know more why not take advantage of our free 20 minute consultation.