VAT advice

Get prepared for the most common VAT pitfalls with our simple, easy-to-follow advice.

How to avoid the most common VAT mistakes

We understand 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 get to grips with 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.

6 common VAT problems

Here are some key issues to be aware of:

Accuracy of dates

You'll need to know the 'date of supply' for each invoice - which isn't always the date of sale. The Cash Accounting Scheme could make things easier.

VAT applied to personal supplies

There are special rules for personal or employee supplies, including things like company cars, fuel, and also business entertainment. 

VAT 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. Find out more about international VAT.

Out-of-date records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.

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. 

Incomplete VAT invoices

You must issue proper VAT invoices to your customers and keep VAT invoices for all your purchases. Sage accounts software enables you to produce VAT invoices straight from your software.

Simple steps to avoid VAT problems

Here are a few things you can do to make submitting VAT as simple as possible:

1Choose a VAT scheme

Check whether HMRC’s accounting schemes will make your life easier and suit your business. 

2Set up a VAT account

Keep on top of VAT by setting aside a regular time each week - or each day - to update your accounting records.

3Assign 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.

4Choose the right software

Make it easier to manage by choosing accounting software that automates VAT invoicing and filing online VAT returns straight to HMRC.

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