More than half (51%) of small business owners admit to making errors when filing their VAT returns, while only 27% are confident in the accuracy of their figures.
These statistics came just hours after the deadline passed for the first digital quarterly VAT return for Making Tax Digital for VAT.
Last month, Intuit QuickBooks surveyed 500 small business owners across the UK on their approach towards VAT returns. The study revealed that many entrepreneurs are spending too much time checking their figures – and still make mistakes – which has a negative impact on their productivity and mental wellbeing.
On average, small business owners across the UK spend 86 minutes running through their figures before filing their VAT returns to HM Revenue and Customs (HMRC).
Although entrepreneurs typically spend upwards of an hour-and-a-half checking their figures, many still overpay or make errors, resulting in unnecessary fines that affect cashflow.
More than a quarter (27%) of small business owners that made errors on their VAT returns paid too much in VAT and received rebates from HMRC.
Meanwhile almost a fifth (18%) of those that made errors on their VAT returns were hit with financial penalties for their mistakes.
As part of Making Tax Digital for VAT, all firms registered for VAT – earning above the £85,000 annual threshold – must have registered for digital quarterly filing by April.
The deadline for the first digital quarterly VAT return was 7th August, but HMRC has confirmed that no penalties will be issued this year for late filing, providing the business in question has made every effort to comply in time.
Samantha Skyring, FCCA Senior Training & Communications Manager at TaxAssist Accountants, says that while digital accounting software is an important step forward for time-poor small business owners, leaving VAT submissions in the hands of a qualified accountant is equally beneficial to save time and allow them to focus on growing their businesses.
“Business owners can feel the pressure when the VAT deadline nears and even once the return has been submitted that worry can stay with them which is neither healthy, nor productive,” said Samantha.
“Using digital accounting software, such as QuickBooks Online, is certainly a step in the right direction; not only for Making Tax Digital compliance but to enable secure 24/7 access to your financial records.
“While we are huge advocates of staying close to your numbers each month, we don’t believe VAT submissions is the best way of doing this.
“If you can save up to 90 minutes each quarter and use this time growing your business then what would that be worth?
“Leaving all that stress and uncertainty to an accountant can not only make you feel better about VAT submissions but give you more time to do what you do best – running your business.”
We can prepare your quarterly VAT returns for Making Tax Digital using either your own bookkeeping records or as part of your accountant’s own record keeping.
Having a trusted accountant to handle your Making Tax Digital for VAT affairs not only gives you peace of mind, it helps to avoid your business wasting hard-earned funds on penalties and interest.