Qandor profile: Simon Merry from Berthold Bauer VAT
After over 20 years of experience, Simon Merry (Berthold Bauer VAT) has more than a few tips regarding value-added tax or, as people more commonly know it, VAT. One of them is to approach the subject as something having value to a scheme. Simon explains:
“We can bring a new perspective on something that’s always been seen as a dull, boring and non-sexy industry; especially for property, where it can change the returns and yields so much.”
The fact that it carries such an image means that people tend to avoid addressing it until they must – and then it might be too late.
“Our industry is very reactive. Not in a negative way but people tend to see their accountant only at the end of the year or call them once a problem or issue has arisen – by which time it is often too late. There’s opportunity to influence the situation at the very outset to ensure a different outcome.”
Simon stresses more than once the need to consult a VAT specialist early in the process of anything you do, especially if you are a developer.
“The lawyer’s job is to draft the contract, but not to see if it could be structured in a different way in order to change the VAT situation. As an example, overpaying VAT at acquisition - even if it is reclaimable - creates a 1% uplift due to the Stamp Duty, let alone the unnecessary financing. There is an over-reliance by developers on accountants, but they don’t talk to them prior to implementing deals and purchases, and what then is the chance of it ‘luckily’ being structured correctly? When it does end up being incorrect, it’s then really really hard to unravel.”
To counteract that, Berthold Bauer VAT is trying to get their connections to contact them automatically at the very beginning of a scheme, even for speculative schemes where they don’t think they should bother them or waste their time. Simon explains:
“Having the luxury to consider VAT at the outset allows us to say, ‘your timing is impeccable – this is mendable, it’s solvable, the outcome can be influenced’. Or in one recent situation, where the VAT was vastly higher than budgeted for, it allowed the client to consider whether the figures still added-up, and the opportunity to think of walking away.”
Simon also suggests it would be advantageous to latch on to someone who is prepared to give free advice:
“Speak to people already in the industry, use their network and experience, and try and make the best of as much free advice as you can. However, I would be very cautious relying on general forums and chat groups – they are not quantified or reliable.”
Simon’s company, Berthold Bauer VAT, has a policy of providing free advice and it has transformed their business. By helping people out – simply by directly answering their questions and providing guidance before mistakes are made – trust is built and if they ever become a client, they will do so without any hesitation.
The road to VAT
Simon started his career as a city trader, then spent a few years in the French military.
“I came back believing the city would welcome me with open arms, only to realise the market had changed and my new skillset was of no value at all.”
A new direction was needed, and he landed unexpectedly in the world of VAT.
For a while it was ok, but Simon started to notice that more and more he was dealing with problems that he suspected the company had caused. Work was being rushed and driven by target periods; clients were getting frustrated.
So, using the core VAT skills gained, he started his own company, an unlikely name, he admits.
“It is a bit of nightmare, actually. Nobody can pronounce it and even less spell it correctly. But funnily enough, it does tend to stick in people’s minds.”
Military experience did help Simon in more ways than one throughout the past 20 years: he learned how to gauge, understand and counter risk. He explains:
“That was really what my job was then and what my job is now: to look at a situation, gauge the risk and find a concise solution – just giving another unquantified opinion is of no use to anybody.”
The solution is often simpler than it seems:
“First, I try to understand what the core question really is. The information we are given is often too detailed, requiring us to filter out distracting opinions and language that often end up being just red herrings.
Our industry loves to portray VAT as being ‘open to interpretation’ and ‘full of grey areas’, whereas that is rarely the case – it is typically black & white, the answer is out there and it’s just a case of finding it and simply describing it to the client.”
This unique approach has allowed Berthold Bauer to save £15million in VAT last year alone that would otherwise have been added onto the cost of the schemes.
To learn more about Berthold Bauer VAT, or to test their free advice click here.