LISTEN BACK. https://www.newstalk.com/podcasts/breakfast-business/the-business-of-vat-logic
TRANSCRIPT:
They say in sports that it's all about small margins, and that's certainly true for business, and some companies unknowingly reduce their own bottom line by failing to claim VAT that they've already paid for in inputs. The next guest played for Leinster, Ireland and the lions, but now he helps large companies find those missing expenses so that they can claim back from the taxpayer. Paul Wallace is the managing director of VAT logic. Morning Paul, good morning, Joe.
What does VAT logic do?
The VAT Act allows for the recovery of historical unclaimed input VAT so that's the credits that you haven't taken up, and we act as a complimentary service to finance, taxation, auditors, VAT advisory firms by carrying out a VAT review over the previous four years to find those. How do we do it? We've, over the last 20 years, established a data analytics program, which is proprietary tech called vata extract, and what that allows us to do is examine every transaction in the general ledger. So in some cases, that's many millions. We've recently done a client for over 8 million transactions for one financial year, and then any anomalies that are thrown up there, we further investigate and verify and then provide a report, so these can be claimed before you pass through the four year threshold where you can't benefit from those so these are invoices that these medium and large companies have paid out, which include VAT which they, for some reason, haven't claimed back.
Is that right? Yeah.
And there's a number of reasons for that. It can be both human and, you know, technical error with ERP systems with wrong settings as well. And these can be small amounts, but over four years and large numbers of transactions can build up to be quite considerable sums. And we been doing this for 20 years in originally out of South Africa, where it's a very mature market, the VAT review market, it isn't really here in Europe. And hence the opportunity for us, and why we set up in late did you get the proprietary software from them? Or did you get Yes, that was developed and all it basically can be moved into all that jurisdictions. So just a change of the parameters in our data analytics. So we've already moved into Ireland and the UK, and we'll be moving further into the European market, okay? And it goes back four years or 48 months.
I presume it's most of these things will have been digitized, and it should be doable. How do you make your money?
Well, we will share in the find it's a success fee basis only. So if we find zero no phone, no fee, no phone, no fee, that's exactly it. We will provide an eight week Analysis Report going through all their financial data, and we can give them a full marks tick, but as you'd imagine, with a no phone, no fee, as you say, and yeah, we will be expectant to find something, and we've had 100% success rate to date. So you have always found some small companies where we've had difficulty with, you know, getting into the ERP systems verification. ERP stands for just basically your your accounting platform with all your financials.
Okay, so, but you will need access. You need full access to their accounts to be able to do the scan, and if you find nothing, you get paid. Nothing, correct?
Yeah. Okay, so, so typically, what kind of amounts are you finding? Yeah, well, our business model would be for to work with companies of 50 million plus turnover. If I put a figure on it, our top, our big, biggest five clients this year, we will have found 3 million, 3 million in the value of the vast land. And they would all that all five of those would be 500 million plus turnover companies, and that would range from, it seems like a major 200,000 up to seven figure some, No, we wouldn't expect, generally, to find seven figure sums. But yes, that is the case, and we're probably maybe 222, clients might, might, might hit that, and it might be a five figure sum as well. Every you know, there's different industries, number of transactions, complexities, and within the business, the you know, the VATable supplies, how much is valuable our vat exempt are zero VAT. So it does vary from company to companies. Not as simple as, this is your turnover. This is what you find. And a lot of cases we dive in and we don't know what we're going to find. You know, is it going to be,
Does it take weeks? Or does it take days?
Yes, six, six to eight weeks. So basically, the usual data that's required for auditors is extracted, uploaded to a secure platform, then we run it through our vat extract data analytics that throws up anomalies, so it might whittle down maybe a million transactions down to 15,000 and then we further investigate that manually with our charter accounting team. And then at that stage, we'll provide a report, go through it with the client, and if everything is confirmed and agreed as missed, then that will be able to be used in their next vat return.
And what about the tax man? Is there any statute of limitations? can the taxman say no, you're going too far back. Or they are they obliged to accept that?
The VAT act allows you to go back 48 months. So once it's there, we'll have all approved documentation, the invoices, etc. So we're very, very thorough that it's, it's all there and but it's not going it's not your problem. Once the tax man has his receipts and they, if they decide not to honor that that's, that's not your problem. You will have found the money as it were, yes, yeah. Well, I think that's, you know, to the company who does their own VAT returns, they will, they will have to realize and agree that it is very eligible, and it was something that was missed. And, you know, thankfully they, have that safety net of being able to go back four years and find where these errors were made.
And how did you get from, you know, being a prop to, you know, looking for VAT in large companies,?
A South African company, funnily enough, where I played a lot of my rugby down in South Africa. And, yeah, and that's my big losses and big wins down there. So I was choose some contacts in South Africa that I got introduced to this i My background is economics. Worked in banking before I went professional in rugby, and when I retired, I've been involved in property, in the investment side, and then laterally in the debt brokerage side for commercial property. So, but this was an opportunity that was presented to me with zero competition in a market that isn't really looked after with regards to being we're in a unique position of being the only company that can go through every transaction on a success fee basis only. So, so it's an easy sell to clients really, when they look at it, and you know our results today, so
your commission is generous as well?
It is, yeah, we share with the clients.
