Are you leaving money on the table?Posted 2021 by Chris Davies
A recent study revealed that on average businesses miss out on 54% of VAT they are entitled to reclaim on travel and expense costs.
Are we surprised? No not really. 50 years ago the then Chancellor of the Exchequer introduced VAT as “a simple tax”. How wrong he was.
Every day businesses are forced to grapple with reverse charges, partial exemption, differing VAT rates, not to mention overseas trade and Brexit. It’s not the VAT man’s job to ensure that you claim all your reliefs but on the other hand if VAT is underpaid you can expect the tax man to come down hard.
Even small businesses are expected to know what expenditure includes VAT and what does not. Common areas of mistake are mileage, air fares, train fares, and entertaining. Whilst software will calculate the VAT liabilities at each quarter, it only does so on the basis of the data entered by the operator. I do believe that this gives businesses a false sense of security that the figures must be right.
In our experience its always best to get an experienced eye to run over the figures before the return is submitted or at the very least ask your accountant if you are unsure of a particular transaction. After all you could unwittingly be leaving a lot of VAT money on the table unclaimed.