Filing a VAT return is a complex process. There are numerous intricacies and quirks that catch business owners out. As it is a daunting process, mistakes with VAT filing are all-too-common. It can be a huge headache for the businesses, as they have to fulfill additional payments as penalties/fines.
With the complications of the VAT laws, it is quite understandable that errors in filing VAT returns can prove too expensive for the business owners both in terms of paying the fine and for triggering the VAT investigation.
- Poor Record-Keeping –
When it comes to avoiding VAT mistakes, poor record-keeping is a big issue that holds importance. This is because one can’t prepare a VAT return without maintaining proper records. Thus, to avoid any kind of problems, it is must to maintain a proper record of sales & purchase invoices of the business. It’s always better to spend the money on a professional accounting firm in Dubai for maintaining proper records rather than paying tax penalties later.
- Incomplete Invoices –
Maintaining correct details on invoices is another vital thing to avoid costly mistakes. Make sure that all the invoice details like VAT registration number (TRN), business name, contact details, invoice date, description of services/goods are correctly entered and the whole invoice is complete as per the UAE VAT laws.
- Lack of Evidence for VAT Reclaims –
As per the UAE VAT laws, the general rule is “No VAT receipt, No claim!” Thus, it is important to maintain proper evidences of VAT to avoid losing an unnecessary amount of money.
- Combining Business & Personal Expenses –
There is always a fine line between business-related expenses and personal expenses. Presenting the bills of personal expenses & claiming a refund on it is considered as an infringement of UAE VAT laws. Therefore, while filing the VAT return & claiming the refund, it is important to present the bills used only for the business purposes.
- Claiming Input VAT on Exempt Supplies –
This is another important point to consider for the businesses that are supplying both taxable and exempted supplies. There are many situations where exemptions or partial exemptions exist. In these instances, it is really good to get professional advice from VAT consultants in UAE.
It is absolutely true, VAT is certainly not the simplest thing in the world to deal with, and this often leads to genuine mistakes made by businesses when filing.
Thus, it is advisable to get specialist assistance & advice on major and complex VAT issues. Considering their second opinion will keep you aware of these common mistakes, making it easier to get the right information together at the time of VAT filing.