It is easy to make simple VAT errors that can prove to he costly for your business. Here are some top tips to prevent those errors.
Do's
Do - Keep a 12-month 'rolling' turnover record if you are not VAT-registered. If your taxable turnover exceeds £64000 in any 12-month period, your business will need to register and charge VAT on your sales. There is a penalty of up to 15% of the net VAT not paid for late registration.
Do - Keep all purchase invoices - you cannot claim back VAT without them.
Do - Charge VAT on any equipment or vans you might sell or part-exchange. VAT is charged on all sales a business makes, unless specifically exempted by legislation.
If your business provides fuel for private motoring then you must add the scale charge to the outputs on the VAT return.
Don'ts
Don't - Claim back VAT on the purchase of a car, although you can claim it back when you buy a van. HMRC provides guidance on the definition of a van and a car.
Don't - Claim VAT back on any purchase that is for private purposes. If it is part business and part private, you should reduce the VAT to reflect the private element.
Don't - Claim back VAT on expenses for entertaining clients, but you might be able to c!aim back VAT on staff entertaining, such as the Christmas party.
Above all, if you make an unusual VAT transaction or one you are uncertain of, please contact us for further guidance.
