Financial Consequences: Inaccurately filing VAT returns through misstating VAT inputs and outputs can cause an incorrect liability to be declared. As a consequence, businesses may face unexpected tax bills, along with fines and penalties imposed by HMRC. These financial setbacks can disrupt cash flow, strain operational budgets, and impede growth initiatives.
Legal Implications: Investigations by HMRC are another potential implication. If discrepancies are identified during an investigation, it can lead to further scrutiny, fines, and the potential for legal action.
Reputation Damage: Finally, consistent errors in financial reporting can signal to customers, suppliers, and investors, that the business lacks proper financial control and adherence to regulations. This loss of credibility can undermine trust and negatively impact business relationships, potentially resulting in the loss of customers and partners.
Ensuring accurate VAT return submissions is crucial not only for financial health but also for maintaining a positive business image and complying with legal obligations.
Streamline Your Business with Effective VAT Return Management
VAT can be complex to manage, but with good processes in place, it can become a much smoother task. So, what are our top three suggestions for managing your VAT returns more efficiently?
Use Accounting Software: Robust accounting software that includes VAT functionality can automate many aspects of VAT management, including calculations and return preparation. This reduces the risk of human error and can save you considerable time. Not to mention under the new MTD guidelines for VAT is now a must for businesses of all sizes.
Choose the Right VAT Scheme: Different VAT schemes can offer significant advantages depending on your business’s size and type. Some can simplify your VAT accounting and potentially improve your cash flow, thereby boosting efficiency.
Optimise Internal Resources: Improve the reliability of the data submitted on your returns by upskilling your finance team to keep them updated of changes in indirect tax legislation & guidance.
The role of your Finance Manager as your VAT controller
There’s no point paying your local accountant for handling your quarterly VAT returns when it’s a task that can be easily managed by your finance team and checking it becomes part of your Finance Manager’s responsibilities.
A VAT controller plays a pivotal role in ensuring the accuracy and compliance of VAT returns for businesses. Their expertise is crucial in navigating the complex landscape of VAT regulations, which can be intricate and subject to frequent changes. By overseeing and managing the entire VAT process, your Finance Manager can identify potential discrepancies, minimise errors, and maximise the utilisation of available deductions.
They can meticulously review financial records, invoices, and transactions to ensure that every detail is accounted for, and they also keep a keen eye on changes in tax legislation that could impact the reporting process. They’ll maximise the ability to claim back VAT on all the expenses you’re entitled to and reduce the risk of claiming VAT back on items you shouldn’t.
In essence, a VAT controller acts as a safeguard, preventing costly mistakes and penalties that might arise from inaccurate or incomplete VAT returns. Their involvement not only ensures compliance with HMRC guidelines but also fosters financial transparency and efficiency within the organisation.
Need help with your VAT returns?
If you need support with your VAT returns or any other aspect of your finance function, get in touch with us now to speak with one of our experts.