With the introduction of the new VAT penalties regime, it is more important than ever to ensure your VAT return is accurate and submitted on time. Whether you are handling it in-house or outsourcing, these five tips will help you avoid the common pitfalls.

1. Keep your software updated for late claims

It is common to receive purchase invoices after the VAT period ends. By ensuring your accounting software is set to pick up late claims, you can avoid overpaying VAT or missing out on refunds; for example, if you receive a December invoice in February, you can include it in your March return, provided the software is properly configured.

2. Reconcile your VAT return

Reconciling your VAT return ensures the figures in your accounting software match the actual transactions. This reduces the risk of submitting inaccurate returns, which could lead to time-consuming corrections. Make sure the net totals for both VAT input and output match those on your VAT return before submitting it to HMRC. You can read more about the importance of reconciling your VAT return here:

3. Review the data carefully

It is essential to check that all transactions are classified correctly. Misclassifying purchases, particularly from overseas, can cause errors in your return. A quick review of the data behind each VAT return box ensures accuracy and helps avoid issues later.

4. Lock prior periods after submission

Locking your accounting software after submitting a VAT return helps prevent accidentally backdating transactions into a previous period. This simple step can save you a lot of hassle and ensure your returns stay accurate.

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5. Set up direct debit payments

To avoid missing VAT payments, set up a direct debit with HMRC. This automates the payment process, ensuring your liabilities are settled on time. Be sure to set your direct debit up at least three days before the payment is due.