VAT-tastrophe! Common Mistakes and How to Avoid Them

Imagine draining almost all your time, money, people, and freedom into the VAT recovery process only for your claims to be rejected. Did someone say awkward? Uh, yes - we did. But to be fair, VAT processes are far from easy, and as your business scales, so does the risk (and resources) required to maximize your VAT potential. 

Fortunately, you don’t have to waste your New Year’s resolution on something like ‘reducing VAT errors’-we’ve got you (re)covered. Here’s a look at the most common VAT mistakes and how to avoid them. 

• Failure to retain payment receipts

They say the ‘proof is in the pudding,’ and when it comes to VAT reclaim, your receipts and invoices are pure sugar. In order to reclaim VAT on expenses, the claimant has to show documentary evidence of these expenses. This means ensuring that all expenses are accurately tracked and that receipts are correctly obtained and retained according to the relevant VAT instructions. 

• Claiming back VAT on non-business use expenses

Unfortunately, confirming your eligible expenses isn’t as straightforward as you’d think. Recoverable expenses (and their rates) differ depending on the specific country where the expense took place. Needless to say, managing multiple VAT refund claims can be resource-intensive and tricky, especially considering the unique rates, regulations, and criteria each country is subject to. Therefore, teams often claim VAT on expenses that are non-deductible in that specific country. This can lead to rejected claims, loss of savings potential, and exposure to fines, audits, and possible penalties.

• Amendments to legislation

Keeping up with legislation is the cornerstone of VAT compliance and recovery. However, VAT regulations are prone to change, and frequent updates and amendments aim to simplify and improve VAT processes Although this should be regarded as a positive, many organizations fail to stay updated with the latest case law and legislation regarding VAT reclaim for their specific industry and expenses. 

• Not adding the human touch

Yes, technology is transforming the VAT landscape and irons out many of the common challenges that hinders smooth recovery. However, although automation and technology takes away the heavy lifting, it cannot replace the need for human intervention when needed. The right VAT solution must provide tech when it counts and human when it matters, to ensure that you have a team by your side when it comes to managing reissues, VAT discovery and any legal queries. 

• Filing for a claim with non-compliant invoices

Red flag alert! When submitting your VAT claims, not only do you need to retain the receipts/invoices, but you need to make sure that the supplier has followed the correct (country-specific) invoicing instructions. Unfortunately, most companies aren’t aware of this and end up sending invoices in the wrong format or lacking sufficient information. This then leads to invoices having to be sent back to vendors/suppliers to be reissued, significantly dragging out the VAT recovery process. 

Zero mistakes, just smooth recovery with VAT IT

It’s not just about avoiding common VAT mistakes. That’s bare minimum in our opinion. Maximize your VAT potential and streamline your VAT processes with one centralized solution for all your VAT needs. 

We’ve got you (re)covered!

https://vatit.com/service/