One key area that all business leaders should be committed to this year: getting their VAT in order.
The consequences of poor VAT planning can range from an admin headache to serious financial implications.
Check levels of VAT understanding
Successful business owners often have a good understanding of VAT but if they aren’t handling them day-to-day, and they do not allocate the VAT handling to a worthy member of staff it is easy to loose track. VAT must be constantly monitored.
Know the VAT exceptions
VAT is full of variables and exceptions to the rule.Being aware of all of the VAT exceptions and variables is essential.
This is particularly key for business in sectors such as education and charities. This is due to processing staff can enter purchases as standard rate for VAT and fully recoverable from HMRC without being aware that VAT recovery for the cost can be restricted or not possible.
There are also many exceptions when it comes to entertainment business expenses and this is an area that is commonly checked by VAT inspectors.
If you fall under these sectors contact our expert team of accountants at Bambridge Accountants (www.BambridgeAccountants.co.uk) who specialize in clients in the entertainment industry and US expats.
Don’t leave it too late
It is all too common for businesses to forget about Vat until the end of the VAT quarter. This can cause several issues.
1. The VAT return deadline may not be met. This can led to the firm to becoming liable for default surcharge penalties.
2. If there are unusual/one-off transactions, leaving it until the last minute to seek advice can cause unnecessary stress to your staff.
3. You could have unforeseen cashflow problems if the VAT charge is higher than expected.
These issues are completely avoidable if you monitor your VAT throughout the year, so that when the VAT return is due it can be quickly and effectively compiled. Any VAT deadlines should be strictly noted.
Think like a VAT inspector
Take the role of an HMRC inspector. Carry out your own businesses audit and spot all the glitches that will be found in the real thing.
1. Audit the basics and check whether all of your team is accounting for VAT on all expenses and income to the correct degree.
2. Complete an audit trail that follows all of the company’s processes in order to spot any errors.
3. Take a look at all of your figures to ensure that they flow correctly and have no incosistencies
4. Conduct sense checks to prevent costly transposition and other processing errors.