VAT Return Nightmare

Written by Annie Lee on 24 January 2018

I am often asked by my clients why we charge for preparing and checking the VAT Returns when the bookkeeping is computerised and the accounting entries are recorded on reputable software. Clients expect the VAT Return to be correct and the check to be done automatically by the software programme but this is not always the case as many factors come into play.

We have found problems with certain software were the output VAT has been allocated strangely between the various sales categories.It is important to check that VAT report back to the sales invoices to ensure the output VAT has been correctly accounted for.
We have also found problems with VAT Returns prepared on a cash accounting basis where vatable sales receipts have been netted off against non vatable purchase payments.
Software needs to be inputted, so there is always a margin for error. The VAT systems needs someone to reconcile the VAT return and clear the entries already accounted for in the submitted VAT Return. There have been cases where our clients have paid too much VAT because the reconciliation was not completed at the end of the last VAT Return.

HMRC would be likely to query a VAT Return which resulted into a repayment. In which case HMRC should be informed the reason for the repayment and be provided with the supporting schedules and documents so that they can release the repayment swiftly to the client.

Three tips to help you avoid VAT Return nightmares.
1. Consider changing your VAT periods so that they coincide with your business year end date and request an email reminder from HMRC so you have plenty of time to submit your VAT Return.
2. Consider paying VAT by direct debit and benefit from an extra three working days before the payment is collected.
3. Reconcile your VAT liability account to your VAT Return. If it doesn’t agree, ask your accountant for help!


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Annie Lee
Corporate Client Director