VAT 101

The VAT man expects all businesses to take reasonable care when completing their quarterly VAT returns. If you make a mistake,
which results in the VAT being underpaid, the VATman is likely to charge you a penalty. Penalties can also be applied where a
mistake results in you claiming a higher VAT refund than is due.
If the VATman believes your careless behaviour lead to the error, he will impose a penalty of between 15% and 30% of the
underpaid (or over-claimed) VAT. If you can show that you took reasonable care when completing your VAT return, but still made
a mistake, you should get away with a zero penalty.
Reasonable care can be demonstrated by taking any of the following actions, when faced with a VAT problem:
– Contact your supplier to query the VAT charged on their invoice.
– Read the VAT notice or VAT Information Sheet that relates to the issue, (if there is one).
– Speak to a VAT ofcer and make a note of the advice given.
– Seek advice from a competent adviser.
We can help you with your VAT problems, but please raise the matter with us as soon it occurs. Sometimes it can take a while to
get to the bottom of a VAT issue, so it is best not to leave the problem on the shelf until the day before the VAT return has to be

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