Scott Burkinshaw
Tax Partner
Why reviewing your VAT return matters
VAT is one of the most widely paid, yet least understood of all taxes in the UK. The complex rules of VAT affect every person, company, or partnership in some way. For VAT registered businesses there are a multitude of potential risks if VAT isn’t properly planned, or if the right advice is not sought.
VAT errors come in all shapes and sizes but can generally be rectified on the next VAT return you submit. For peace of mind, our dedicated VAT team is happy to review your last VAT return, free of charge, and to reduce the risk of any penalties or problems.
What are VAT penalties?
HMRC is serious about VAT, and the penalties they issue for VAT errors can have a serious impact on a business. If a VAT inspector discovers errors, whether a result of carelessness or deliberate attempts to underpay, penalties are likely.
- If a VAT return is found to have errors resulting from carelessness, the penalty may be as high as 30% of the amount understated.
- In more serious cases, such as deliberate errors or concealment, the penalty can range from 70% up to 100%.
- If the taxpayer is judged to have taken reasonable care with their VAT Return, there is a good chance no penalty will arise.
The level of penalty is reduced according to HMRC’s views of the assistance provided by the taxpayer in notifying, quantifying, and verifying the inaccuracies.
Common VAT errors to watch out for
There is a lot that can go wrong with a VAT return if proper care is not taken. Below are some of the most common VAT errors that an inspector will pick up on during an investigation.
- Poorly maintained records, missing or duplicated invoices, or late returns or payments.
- Getting ‘time of supply’ wrong – this means charging VAT at the wrong time (such as during the wrong VAT quarter)
- Incorrect application of rules for non-standard transactions (e.g., asset disposals, sub-contractor payments, property income, services provided by overseas suppliers, and more.)
- Attempting to recover VAT on business entertainment expenses, such as food and drink, accommodation, or event tickets.
- Partial exemption errors in complex areas such as property, medical and pharmaceuticals, and financial commissions.
- Errors on credit notes or bad debt relief
Speak to us today to arrange your free VAT return review
The Shorts VAT team has decades of combined experience in helping businesses with a multitude of VAT challenges, including correcting errors and navigating assessments, control visits and other complex issues.
We encourage you to get in touch with our team today for a free VAT return review, whether you have concerns about a recently submitted VAT return, or would like reassurance that you have both the knowledge and accounting systems in place to submit accurate VAT returns.
