Farley And Partners

Avoiding Common VAT Mistakes

We know that VAT can cause problems from time to time.

And if you’re trying to run a business, you certainly don’t want to spend your time trying to understand every single detail.

Fortunately, you don’t have to. You can make handling VAT easier – and avoid most VAT mistakes – if you make sure you’ve got the right systems in place.

Common VAT problems

Recognising the areas of VAT that can catch other businesses out is a good way to avoid them yourself. Here are some key issues to be aware of:

  • Missing details
    Chasing details can lead to late VAT returns and result in fines and more frequent VAT inspections. Make sure you collect all the details you need and record them straight away
  • Accuracy of dates
    You’ll need to know the ‘date of supply’ for each invoice – which isn’t always the date of sale. Changing to Cash Accounting Scheme if this is permitted could make record keeping easier
  • VAT applied to personal supplies
    There are special rules for supplies you use personally or provide to your employees, including things like company cars, fuel, and also business entertainment
  • VAT applied when trading internationally
    There are different VAT rules that need to be applied depending on whether you are trading with businesses inside the EU or elsewhere
  • Out of date records
    You can avoid high accountancy fees by keeping accurate and organised records making it quicker and easier to submit your VAT returns
  • Incomplete VAT invoices
    You must ensure you issue proper VAT invoices to your customers. You must also keep VAT invoices for all your purchases
  • Reclaiming VAT
    If the goods or services you supply are exempt from VAT, you cannot usually reclaim the VAT you pay on purchases related to them

How to avoid the problems

It’s not realistic to expect VAT to be entirely straight forward but there are a few things you can do to make submitting VAT as simple as possible.

  • Choose a VAT scheme: Check whether any of GRA’s accounting schemes will make your life easier and suit your business better. There are several schemes that help simplify VAT if your turnover is within a specified amount.
  • Set up a VAT account: Take a disciplined approach to keeping on top of VAT. It’s a good idea to set aside a regular time each week – or each day – to update your accounting records.
  • Assign a person to manage VAT: Whether you plan to manage VAT yourself or delegate the work, make it clear who is responsible to avoid confusion and ensure consistency in your record keeping.
  • Choose the right software: Make it easier to manage by choosing accounting software that automates VAT invoicing and filing VAT returns straight to GRA.

VAT can be complicated to understand but by being aware of the areas that can cause problems and following simple steps to avoid them, you can save yourself time and avoid the cost of high accountancy fees and fines.

How we can help you manage VAT

We can help you speed up your VAT processes with the right Accounting Software which allows you to manage all your VAT processes including calculating VAT, producing VAT invoices and automating your VAT returns directly to GRA. Call us to discuss your requirements.

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