5 Mistakes People Make When Doing Their Own VAT Return

Completing your VAT Return can be a stressful task if you leave it to the last minute, or don’t keep proper records of your income and expenses. Here at SG Accounting, we have seen many VAT Returns, and here are the common mistakes made by clients when submitting their own VAT Returns:

1. Box 6 figure for Flat Rate Scheme companies

If your company is registered for the Flat Rate Scheme, the box 6 figure on your VAT Return should be the gross sales for the period. You charge VAT at 20% of your net sales, but your Flat Rate Percentage is applied to your gross sales, and therefore this is the figure that should be included on your VAT Return.

2. Nil VAT Returns must be filed if there is no trading activity

It is a common misconception that if you do not trade in a period then your company does not need to submit a VAT Return as the liability would be nil. As your company is VAT registered, you must file a VAT Return, reporting to HMRC that no sales were made and therefore no VAT is due. If you are using Standard Rate rules for VAT, there may be some VAT reclaimable, creating a refund from HMRC for the quarter. Likewise, if you are on the Flat Rate Scheme and have a single purchase of capital expenditure goods costing £2,000 or more (VAT inclusive), the input VAT may still be able to be reclaimed.

3. Box 4 figure entered by mistake when using the Flat Rate Scheme

If you are on the Flat Rate Scheme and do not have a single purchase of capital expenditure goods costing £2,000 or more inclusive of VAT, then your box 4 figure will be nil. However, it is a very easy mistake to accidentally include a figure in box 4, meaning you will have to write to HMRC to amend the Return.

4. Your Flat Rate Percentage

If your company is registered for the Flat Rate Scheme, since April 2017 when the new rules regarding ‘limited cost businesses’ came into play from HMRC, it can be confusing as to the correct percentage that needs to be applied – even more so if you are still in your 1% discount period. However HMRC have provided a calculator that’s simple to use online so that you know if you are caught by this (Click here to use the calculator). If you are in your 1% discount period and a limited cost business, a percentage of 15.5% would be applied.

Expenses that are re-charged to your client are treated as vatable income and should be included on your VAT Return. This means that an invoice must be raised for these transactions and recorded on your accounting spreadsheet.

If you have queries about submitting your VAT Return, or would like us to submit it on your behalf, please do not hesitate to contact us. If you’d like to see our prices, click here.