Small business owners must avoid costly mistakes when calculating, reporting and paying Value Added Tax (VAT).
The best way to prevent errors and stay on the right side of HM Revenue & Customs (HMRC) is to have an expert take care of your VAT affairs.
A qualified accountant or bookkeeper can ensure that all calculations are correct, up-to-date, and submitted on time and in line with the latest VAT regulations, including Making Tax Digital.
Employing an accountant to keep on top of record keeping will go a long way in preventing expensive mistakes and financial penalties related to VAT.
Some of the most common VAT errors include:
- Entertainment: You can claim back VAT on entertaining employees, but not always for clients.
- Split usage: Where you provide items such as cars or phones, you can only claim the VAT back on business use.
- Inaccurate information: Entering the wrong figures on a VAT return can leave you liable for an HMRC investigation or lead to you paying too much or too little tax.
- Filing late: Ensuring that you file the necessary VAT information on time each quarter is essential to preventing the accumulation of penalty points, which can lead to a fine.
- Failing to register: If you reach a taxable turnover of £85,000 or more in any tax year, you will need to register.
To cut down on errors, here are a few things you can do to improve VAT reporting:
- Take time to update – Keep on top of VAT by setting aside a regular time each week – or each day – to update your accounting records.
- Maintain accurate records – You must retain invoices and receipts to report VAT accurately. You can achieve this by implementing the latest cloud accounting software and apps.
Speaking to an expert will help you avoid many of these VAT mistakes, which can be easy to overlook but could be costly to you and your business. Our VAT team can guide you through the complexities and ensure you do not encounter future VAT risks. Arrange a consultation with us today.
