Common VAT Return Errors and How to Fix Them
Let’s be honest—nobody enjoys paperwork, especially when it comes to VAT returns. But if you’re running a business in the UK, it’s something you can’t ignore. And while most business owners do their best to stay compliant, Common VAT Return Errors often turn VAT filing into a major headache due to small, avoidable mistakes. Here’s a quick breakdown of the most Common VAT Return Errors companies make when filing a VAT tax return—and more importantly, how to avoid them.
Mistakes That Happen More Than You Think
Getting the Numbers Wrong
This one’s at the top for a reason. Whether it’s input VAT or output VAT, getting the figures wrong happens all the time. A missing receipt, a misread invoice, or even forgetting a purchase can throw your return off.
What to do: Invest in reliable bookkeeping tools—or better, link your accounting software directly to your bank. That way, your numbers always match up, and manual entry errors go down.
Personal Expenses in the Mix
It’s surprisingly easy to blur the lines between personal and business spending, especially if you’re a sole trader. But claiming VAT back on that Amazon order that included a kitchen blender? HMRC won’t be too happy.
Solution: Keep separate accounts. Always. That blender might be great, but it’s not part of your VAT tax filing.
Submitting Late
Deadlines aren’t just suggestions. Miss one, and you’re looking at penalties. In most cases, it’s not laziness—it’s just forgetfulness or being too tied up with daily operations.
Fix: Set a recurring calendar reminder a week before the due date. That gives you time to double-check everything and submit without stress.
No Valid VAT Invoice
If you’re trying to claim back VAT, you need to have a proper invoice. No invoice, no reclaim. It’s that simple.
What helps: Make it a habit to request a VAT invoice for every business purchase. Most suppliers will send one over without question.
Choosing the Wrong VAT Scheme
There are a few VAT schemes out there, like Flat Rate or Cash Accounting. If you’re on the wrong one for your business model, you could end up paying more than necessary—or underreporting.
Check: Review your VAT scheme once a year. As your business evolves, your scheme might need to change too. It also directly affects how your annual VAT return is calculated.
Reverse Charge Confusion
If you work with overseas suppliers, you’re expected to use the reverse charge mechanism. A lot of people miss this step, thinking it doesn’t apply to them.
A quick tip: Brush up on international VAT rules or talk to a tax pro. It’s worth it when filing your HMRC VAT tax return.
Typing Errors
A small typo in your VAT registration number can be enough to delay your return. It might sound trivial, but it’s one of the top reasons for return rejections.
Reminder: Before you hit submit, double-check the details—even the ones you’ve copied and pasted.
Ineligible Claims
You can’t claim VAT on everything. Expenses like business entertainment, personal travel, or gifts over a certain amount don’t count.
Tip: Keep a list handy of what’s claimable and what’s not. When in doubt, leave it out.
Wrong Period Selected
A lot of errors come down to selecting the wrong filing period. It’s easy to get confused when doing multiple reports or revisiting past months.
Simple fix: Match your return dates with your accounting software’s default calendar. It reduces confusion and errors in your VAT submission.
No Digital Records (Post-MTD Rule)
Since Making Tax Digital came into effect, HMRC expects your VAT records to be digital. Paperwork alone no longer cuts it.
Upgrade: Use a cloud-based tool that stores receipts, invoices, and returns automatically. It’s easier for you and looks better during inspections.
Smart Ways to Avoid VAT Trouble
If you’re tired of second-guessing yourself every quarter, here’s what helps:
- Use automated tools to prepare your returns
- Review your reports with an accountant, even if briefly
- Don’t wait until the deadline—submit early
- Keep every invoice, however small
- Stay informed with the latest VAT updates from HMRC
These small steps can save you from big issues later.
Conclusion
Filing VAT returns doesn’t have to feel like walking on eggshells. The more familiar you are with the process, the easier it becomes to spot—and avoid—mistakes.
Whether you’re submitting your first VAT submission or just cleaning up your system, accuracy and awareness will go a long way. After all, getting your HMRC VAT tax return right the first time is better than spending hours fixing it later.