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Take Care with VAT

Newsletter issue - January 2011.

The VATman 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 led 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 officer 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 its best not to leave the problem on the shelf until the day before the VAT return has to be filed!