12 Mar Common VAT mistakes to avoid
VAT can be a time-consuming and confusing task. When trying to run a business, getting to grips with all aspects of VAT can be a bit of a nightmare. With that in mind, read on to discover some of the most common VAT mistakes businesses make, so that you can avoid them.
Making mistakes in overseas trading
A lot of business owners make errors when it comes to overseas trading, as the VAT rules are slightly different. This can result in consequent confusions if you don’t fully understand the rules you are bound to. For example, VAT is not charged on the export of goods to other businesses in European countries that are VAT registered. Moreover, import VAT is levied on goods imported from countries outside of Europe, yet this can be reclaimed as input VAT.
Not maintaining accurate VAT records
You can incur increased accountancy fees, and you may even get yourself into legal hot water if you do not accurately maintain your VAT records. Make sure your VAT account is maintained on a regular basis to prevent mistakes. You can do this yourself or delegate this to someone else.
Reclaiming VAT on items that are not redeemable
This is a common error that a lot of business owners make. You cannot claim on exempt items your business sells. You also cannot reclaim input VAT on any free accommodation provided, entertainment business expenses, personal items, and other employee supplies, for example, fuel and company cars. There are some employee supplies you can include, though, for example, staff entertainment costs that were incurred for company purposes, charges for free meals, cost of business mileage, and expenses incurred as sustenance while travelling for work.
Failing to seek professional VAT advice
Doing everything on your own is admirable, but it can often be at a detriment to your business. Seeking professional VAT advice comes highly recommended because you can make sure that your business is using the best VAT scheme for you, and that VAT is being managed effectively. You will save money and be able to run your business more efficiently too.