Accounting for VAT and submitting VAT returns is part of doing business for a majority of companies in Ireland. This means allocating resources to ensure your business handles the process properly – financial resources to hire an accountancy practice or staffing resources to do it internally.
VAT is a complex area making it all too easy to make mistakes in the process. These mistakes can cost you time and money. Here are five common mistakes you should take immediate steps to avoid.
1. Not Keeping Accurate Records
Good records will ensure your accounting for VAT is error free. This is the fastest and most effective way to deal with VAT. Poor quality records, on the other hand, take time to correct. They can also take up time when the Revenue queries something on your return, i.e. queries are more likely, and it is more difficult to deal properly with queries if you don’t have accurate VAT records.
All this time costs you money. In addition, the Revenue may block the recovery of VAT and you may also be hit with a fine for not keeping proper VAT records. Good quality records are, therefore, essential.
2. Submitting Late VAT Returns
This will also get you a fine so make sure you always submit your VAT returns on time. If you have an accountant, they will help ensure you meet all VAT deadlines. If you look after VAT internally, put a calendar system and/or reminder system in place to highlight the various Revenue compliance dates you need to be aware of. This will ensure important dates, including dates for submitting VAT returns, are not missed.
3. Not Issuing Proper VAT Invoices
This is another mistake that will result in a fine. Also, the recovery of VAT may be blocked by the Revenue if your invoices are not clear. Make sure your invoices include the correct VAT details where appropriate. You can get advice from your accountant on correctly configuring VAT invoices plus accounting software can help.
4. Not Excluding Non-Deductible VAT
There may be some purchases in your business where it is not possible to claim for VAT. It is important, therefore, that you take care when completing this section of your VAT return. Also, what you can and claim for is a complex area, so it is often helpful to get the assistance of an accountant.
5. Failing to Properly Account for International Trade
Reporting international sales and purchases on your tax return can lead to queries from the Revenue and, in some cases, leave you out of pocket. Pay particular attention when selling to customers in other EU countries. There is often no VAT liability, but you still have to include details on your VAT returns.
By avoiding the above mistakes, you are less likely to have VAT returns queried by the Revenue, you are less likely to be fined, and you are less likely to be out of pocket.
To get help with VAT issues and returns in your business, or for help with any other accounting issue, please contact a member of the Gilroy Gannon team today.