As a small business owner, you may have encountered difficulties when it comes to calculating, reporting, and paying VAT. It can be a complex area, and mistakes can result in costly penalties and fines from HMRC. To prevent these errors, consider these tips and strategies for better VAT reporting and compliance.
Seek Expert Help
One of the best ways to avoid costly VAT mistakes is to have an expert handle your VAT affairs. A qualified accountant or bookkeeper can ensure that all calculations are correct, up-to-date, and submitted in accordance with the latest VAT regulations, including Making Tax Digital. By employing an expert, you can reduce the risk of financial penalties and other costly mistakes related to VAT.
Avoid Common VAT Errors
Here are some of the most common VAT errors that small business owners need to avoid:
Entertaining clients
You can only claim back VAT on entertaining employees, not clients.
Split usage
When it comes to items such as cars or phones, only the business usage is eligible for VAT reimbursement.
Incorrect information
Entering incorrect information on your VAT return can result in investigations from HMRC or overpayment/underpayment of tax.
Late filing
Filing the necessary VAT information on time each quarter is crucial in avoiding penalty points and potential fines.
Failure to register
If your taxable turnover exceeds £85,000 in any tax year, you must register for VAT.
Tips for Improved VAT Reporting
To improve your VAT reporting and reduce the risk of errors, consider these tips:
Regular updates
Set aside a regular time each week or day to update your accounting records and keep on top of VAT.
Accurate records
Keep invoices and receipts for accurate VAT reporting. Cloud accounting software and apps can simplify this process.
In conclusion, by seeking expert help, avoiding common VAT errors, and following these tips, you can ensure that your small business stays compliant with HMRC and avoids costly VAT mistakes. Get in touch with our qualified accountants to help you be as tax efficient as possible at enquiries@aitaccountants.co.uk
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