Your VAT compliance isn't as compliant as you might think

A breakdown of the negative consequences of an area untouched by digital transformation and what can be done to solve it. 

After performing case studies for three very large multi-national clients, VAT IT discovered that companies are very much at risk of filing input VAT that is actually not claimable. Here are some eye-watering stats showing the result of a process that has undergone no digital transformation: 

• 27% of VAT claimed is based on non-compliant or missing invoices.
• 16% of the invoices claimed are not even scanned or filed.
• 11% of the claimed invoices are in a non-compliant format.
• Most employees are unaware of what qualifies as a compliant or valid invoice for claiming. 

Busting misconceptions around VAT compliance

You may believe your local VAT recovery is compliant and under control because your business:

Without the right technology and expertise driving that tech, invalid tax receipts and expenses will continue to be submitted putting a company at major risk. This results in another jaw-dropping statistic - 27% of input VAT is incorrectly claimed through local returns, leading to:

• Overclaiming: Claiming VAT on costs through invoices that are non-compliant and expenses that are not claimable.
  
  
• Penalties: Should your local VAT authority perform an audit and find any level of non-compliance, they will impose severe penalties amounting to thousands as well conduct onerous retrospective audits that will pressurize your resources. 
  
  
• Negative reputation: After being noted as a non-compliant filer by your local VAT authority, your business’s vat returns will continue to be scrutinized year after year. This adds heavy administration burdens to your entire finance team.

Working with VAT IT ensure your business stays 100% Compliant

• Step 1: Performing a Compliance Health Check

VAT IT will request and obtain a sample of local Travel and Entertainment (‘’T&E’’) invoices. Thereafter, we assess and test all invoices in the sample for compliance against your local VAT laws.

• Step 2: Lost Savings Analysis and Compliance Report

VAT IT analyses the completeness of a schedule of local T&E that was included in a local VAT return to ensure all compliant invoices were claimed as well as outline any invoices that were incorrectly claimed. 

• Step 3: Recover and Comply

Once the above assessments have been performed, VAT IT will provide you with a report detailing your compliance level and possible exposure and provide you with an ongoing solution for the recovery of Domestic VAT and compliance maintenance.

Conclusion: What Are you currently sacrificing to stay compliant?

Without a digital solution addressing the recovery and compliance, a tax department is bound to continue facing sacrifices - a sacrifice of overtime, long hours and administrative manual work to check invoices and prepare returns. Or the sacrifice of non-compliance which is non-negotiable.

The introduction of a digital solution will alleviate the administrative burden from a tax team, make processes smoother and more accurate and give peace of mind that all returns are 100% compliant. Ultimately, technology and a expert service can free a tax team to focus on better, deeper-thought work; and leave the mundane and repetitive tasks to tech to perform.

Ensure your business is 100% compliant. Download the brochure below to get a snapshot into the digital future: