Back in 2019, Goals Soccer Centres made a substantial accounting error with regard to their VAT, with a £12 million (at least!) blunder dating back “several years”. Even a small VAT error can be a nightmare to deal with, so one can only imagine the horror that the five-a-side football firm found themselves entangled in.
But such mistakes are easily avoidable. One would of course advise nipping it in the bud before it reaches circa £12 million. When owning a business, the danger is overstretching yourself and making mistakes.
VAT also brings its fair share of issues for the wider public with the inevitable price rises that come with it – take for instance the City Pub group chain who warned of potential price rises back in March.
But how else can you avoid and rectify those mistakes that are all too common in the realm of VAT accounting? Of course staying VAT compliant is important and amazing for a small business, but it involves the strain of completing accurate returns.
Know where the mistakes could lie
Given the complexity of VAT, it’s easy to feel you’ve made a mistake somewhere, even when you haven’t. The key to remaining compliant is to spot where mistakes could take place, or where they usually tend to take place more generally.
The first of these potential errors is likely to be the first one you think of, and that’s entering the incorrect figures. Some figures will depend on which scheme you’re using, which can make it even more confusing, but remind yourself of the scheme you use to ensure that you enter the correct figures.
As for non-standard supplies, you could be making the honest mistake of not charging VAT on them. In the long run, this could result in some kind of VAT deficit in your accounting.
Highlight the transactions you are unsure of and seek advice from a professional – it can’t hurt to have another set of eyes. This can easily be done with the likes of automated accounting softwares like Xelix on hand to deal with some of the more tedious areas of accounting.
It applies to most things in life, but arguably nowhere more so than VAT returns. VAT invoices have to be issued within 30 days of the date of supply (or payment if it happens to be made in advance).
Naturally, this differs between goods and services, so make sure you’re clued up on when the date of supply is for you. Generally for goods, the date of supply is the date the goods are sent, collected, or made available. For services, it is generally the day the service was supplied or completed, depending on how long the service takes.
By the same token, you may be guilty of issuing a VAT invoice when you don’t need to. For instance, a VAT invoice isn’t needed for exempt of zero-rated sales within the UK, gifted goods, or if your customer operates a self-billing arrangement. Once again, seeking advice could benefit you greatly if you’re unsure of the rules and regulations around VAT.
And there you have it – just a couple of tips and tricks to mitigate the risk of problems with your VAT.
With immense knowledge about different walks of life and a curiosity for deep research, Ismail Khalid is a versatile writer who is passionate to write for lifestyle blogs. His writings carry a huge amount of different social aspects that may help to improve your lifestyle.