Why do you need an accountant to do VAT returns…..

can vat returns be done yourself?

….. when you can DIY with the click of a button online?

Some accounting software companies would have you believe that filing your VAT return is simply the click of a button. Regardless of the fact you may not want (or have the time) to DIY,  thinking it only requires the click of a button may result in you paying the wrong amount of VAT or submitting incorrect data. 

Technically yes – it’s a click of a button to prepare the VAT return, then another click of a button to file it. However, along with those 2 clicks, you need to know the data you’re submitting is correct and you’re paying the right amount of VAT to HMRC. 

While we’re all for empowering our business owners and championing independence, there are some things it’s just simpler to get support with. We’d rather you had the peace of mind knowing things are being taken care of properly. 

Submitting the return is the click of a button, but knowing the data is correct is years of knowledge and experience

It’s easy to click a button, but it’s not always easy to know the answers to these questions:

  • Are you using the right % if you’re on flat rate?
  • Are you using the best scheme for you and your business?
  • Are you charging the right rate of VAT?
  • Has the correct VAT treatment been applied on every transaction?
  • Do you have the right paperwork/receipt to claim the VAT back? 
  • Are HMRC going to be happy with the return?

Also to note here, the new Domestic Reverse Charge VAT for Construction throws up further issues – like:

  • Do you know when to charge VAT and when it needs to be reverse charged? 
  • Did you know that you can’t use the standard cash basis, it needs to be on an accruals basis?  
  • Do you know how to change from one scheme to the other?

In reality it’s a whole other ball game knowing you’re submitting the right things to HMRC and, as a result, paying the right amount of VAT to HMRC each quarter!

Your accountant or bookkeeper will be carrying out the right checks each quarter to save you from unexpected bills and inspections

When you work with an Accountant, they’re not simply clicking a button – we wish! They’ll be carrying out checks to make sure the data is accurate, to ensure you’re claiming the VAT where you should be (and looking out for where you shouldn’t). They’ll also make sure you’re on the right scheme and using the correct percentage if you’re on flat rate. 

We see many businesses falling into the same trap when they DIY. They use the flat rate scheme because their industry has a low percentage. Then, down the line, they realise they’re actually classed as a low cost trader and don’t meet the criteria required for the industry percentage. They realise they should actually be using a much higher percentage as a low cost trader. 

So what problem does this cause? Using a lower rate than you should have means you’ll have underpaid VAT, leaving you with an impending back dated VAT bill you didn’t expect and may not have the money for. 

Depending on how long this has been incorrect, the bill could be huge. We helped a new client out of a situation where they’d been underpaying for 18 months, and the resulting bill was for thousands. 

These days it’s very rare we come across a company that benefits from being on flat rate. It actually costs most businesses to use the scheme – you’re likely better off using either the standard cash or accrual scheme.

We’ve also seen many businesses use the 1% first year discount for much longer than a year. This is another way you can fall into the trap of underpaying VAT, and building up under declared VAT debt to HMRC. These errors could also put you at risk of an inspection, and can result in penalties if HMRC deem the mistake to be careless or deliberate. 

Both are easy mistakes to make, but costly ones! And the software will never be able to tell you that you’re making these mistakes. Though we can help you in various ways if you’ve made a mistake like this (figuring out a payment plan for example) we’d rather help you from the get go. We really don’t want you to feel the stress of a surprise lump sum due to a DIY error. 

Software is great, but it won’t tell you when you need to file your return

One of the biggest challenges of filing your return and staying in HMRC’s good books is actually knowing when you’re due to file it! As good and forward thinking as Accounting software is these days, it won’t alert you when it’s time to file your return with HMRC. If you’re planning on going the DIY route, you’ll need to make sure you remember each quarter to do it. Cause if you miss a deadline you’ll be on HMRC’s naughty list and will get fined.

At PPF we’re deadline focused when it comes to our clients returns. We can take care of your VAT return so you can relax knowing you’re complying with all the rules and regulations, and your returns will be filed in plenty of time each quarter. We take a 5 step approach: 

  1. We create a recurring quarterly job in our job management system so we NEVER miss a deadline and begin work on the VAT return the day after the quarter end
  2. We carry out an audit of ALL transactions for the period – checking that purchase VAT has been claimed on every transaction it should have, and conversely that it hasn’t been claimed where it shouldn’t have been. 
  3. We ensure you’re on the best scheme to maximise your cashflow – We’ll advise and decide on whether you need to be on a cash or accruals scheme. We also keep an eye on going over the threshold at which you HAVE to move to accruals by obligation
  4. We’ll send you notification of the amount due within 3 weeks of the quarter end (subject to receiving records from yourselves in sufficient time), giving you 2 weeks notice of the amount to be paid
  5. We file the VAT return on time, every time. 

Even if you could do it yourself, do you want to?

We really do advise you get the support of an Accountant for your VAT returns. You will feel more confident you’re error-free and claiming the right amount of VAT back. But even if you could spend the time mastering the process and checking the data, do you want to? 

As a business owner it’s always important to look at what you can outsource or delegate to give you more time for the things it’s vital you do yourself – like overseeing the business, managing your team, talking to clients and customers, making sales even. Prioritise your time and use it wisely. Leave the accounting work to those who chose Accounting as a profession (and who are crazy enough to love it). You’ll thank us down the line, if not immediately.

If you’re now thinking “Nope, there’s no way I’m going to DIY this one” then here’s the link to chat to us about your VAT return.