Tips to Correctly File Your VAT Return

VAT return filing needs to be timely and accurate. Small businesses and entrepreneurs often face challenges in terms of delayed filing, penalties, and errors. 

The following tips can be helpful in terms of filing the correct VAT return.

1-Understand the VAT system/return

It’s important to understand the following aspects of VAT return.

1-VAT return summarizes and reports on the total input and total output VAT. 

2-If the VAT you paid on purchases (Input VAT) is higher, you will be able to claim the excess you paid.

3-If the VAT you collected on sales (output VAT) is higher, you will be required to pay the balance. 

So, be very clear whether you need to claim or pay the VAT.

2-Keep accurate & organized accounting records.

Keeping an organized and accurate accounting record is the foundation of appropriate VAT filing. It’s a good idea to execute the following.

1-Keep organized and sorted records for invoices, receipts, credit notes, delivery notes, and all other documents that support the VAT balances.

2-Monthly reconcile accounting ledger with VAT receivable/payable account. 

3-Accounting software can be a good way to manage sorted accounting records and support. 

3-Understand your rights & liabilities.

Keep eagle eyes on all the business expenses that can be claimed. For instance, personal expenses and sometimes entertainment expenses may be not eligible for input tax claims. So, keep an eye on the changes/updates in the VAT.

4-Avoid common mistakes

Pro-actively avoid common VAT mistakes like the following,

•Classification error- Accurately classify transactions for the VAT calculation. For instance, there can be different VAT rates applicable to different products/services. In this case, a good idea can be to maintain a product/services chart for classification purposes. 

•Delayed filing- Proactively manage all the administrative challenges for VAT filing purposes. Proper planning and organized accounting help ensure the return is timely filed. 

•Erroneous figures- Please double-check all the figures and numbers used in the VAT. Reconcile all the data/content in return with the accounting ledger. 

Conclusion

VAT filing needs to be proactively managed in terms of organized record-keeping and accurate accounting. In the article, we have discussed certain tips for VAT filing like understanding the VAT system, understanding VAT payments that can be claimed in return, avoiding common errors like classification, erroneous figures, and delayed filing, etc. 

The key to efficiently managing VAT filing is organized accounting and proactive tax assessment.