More than a third of small businesses are missing out on making significant cash savings by not claiming back on VAT, often claiming they don’t understand the rules associated with the tax, according to a new study.
The report, commissioned by Sage, also found that at least half of such owner-managers estimate they are down by more than £500 a year due to not knowing every item that VAT can be recouped on.
Business owners were seemingly aware that everyday office items were tax deductible, such as stationery and printer ink, additional work-related purchases such as fuel were more likely to go unclaimed.
A lack of awareness about fuel may explain why travel emerged as a business owners’ biggest cost ahead of "food and refreshments" which, like fuel, are also VAT reclaimable in a business context.
Lee Perkins, managing director of Sage’s small business unit, said: "Businesses that aren’t claiming back the VAT they are entitled to are really putting themselves at a competitive disadvantage.
"Despite being around for 40 years, the ever-changing nature of VAT has put many business owners off from digging into VAT and fully understanding what can be refunded."
According to the study, the complexities around reclaiming VAT means 36 per cent of owner-managers miss out on savings. Meanwhile more than half (52 per cent) of those surveyed believe that such negligence costs them and their business hundreds of pounds each year.
Whether you’re just starting out or have been in business for many years, at TaxAssist Accountants we can help SMEs meet VAT responsibilities. We will look at VAT schemes you are eligible for and establish whether you would be better off adopting one or a mixture of them. Some schemes can lead to tax savings and a reduction in bookkeeping responsibilities.
If you would like to discuss our VAT returns service then please don’t hesitate to arrange your free initial consultation online or via phone on 0800 0523 555.
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