VAT Return Filing Issues Small Businesses Can Face

Value-added tax is like a ticking bomb on the head of small business organizations. They are always worried and cautious if they meet the threshold requirement or not. The next thing that keeps them worried is registering for VAT payment. They have to take care of all the little details, which they might not even know. If they commit any mistake in the process, they have to face penalties, as well as a poor reputation in the market.

However, the issues and struggle with value-added tax do not end here, as they have to take care of the return filing process too. This is the area where many small business organizations fail to end their suffering. They lack awareness about return filing and end up facing the issues that they had not acknowledged and again face charges and penalties.

This article aims to shed light on the VAT return filling issues small businesses can face in order to create awareness and save the business from losing their revenue and reputation.

Top 7 Issues of VAT Return Filing You Need To Avoid

Value-added tax seems like a complicated matter to small business organizations because it does not apply on a fixed rate or basis. The value, rate, and amount keep changing according to the change in the value of goods and services. Still, there are specific criteria that prove the guiding light for abiding by the tax rules and save you from the issues.

Here are some of the major issues related to VAT return filing you need to avoid in order to save yourself from penalties and fines.

1. Lack of Tax Knowledge

The very first issue small business organizations face in terms of VAT return filing is the lack of tax knowledge. They are just aware of the fact that they need to pay value-added tax after getting registered for it. They do that and think they are done with their duty. However, it is not done as VAT return filing is another important part of the procedure that requires their due attention.

2. Incorrect TRN Number

The next issue most small business organizations face is entering an incorrect TRN number. It is the number that denotes their tax registration; however, they confuse it with their business registration number. All of this opens a new avenue of legal issues for them. On the other hand, some organizations hire the best VAT consultancy services in Dubai from the get-go to ensure they do not commit any mistake and handle their taxation duties professionally.

3. Invalid Tax Invoices

Another common issue that you need to watch out for, while return filing for value-added tax is using the correct tax invoices. Having the invoices is critical for the return filing procedure. Still, some organizations end up losing their invoices and present the invalid invoices to the authorities. It hinders the process, as well as tarnishes the reputation of the organization.

4. Incorrect Tax Calculation

Value-added tax return filing is completely dependent on the initial tax payment. Most of the small organizations commit the mistake of calculating tax incorrectly. The wrong calculations can earn penalties and other punishments, so do not take the matter lightly and consult the experts if you are unsure about something.

5. Lack of Knowledge about Rate

Apart from incorrect tax calculation, another critical issue in the process of return filing for value-added tax is the lack of knowledge about the rate. You can only calculate the tax correctly when you are aware of the rate of tax. Value-added tax does not apply to a fixed rate. So, be sure to check the VAT rate before calculating the amount for returns.

6. Insufficient Evidence for Reclaims

Another important issue that the small business organization can face in the process of value-added tax return filing is the insufficient evidence for reclaims. Reclaims can only be made on specific grounds that you need to check and ensure before taking any action.

7. Charging VAT for Excluded Items

Lastly, the issue that can create a hurdle in the return filing process is charging VAT for excluded items. You need to be careful about return filing for the items that are included or were considered at the time of tax payment. If you do not know the details of the process, you can hire the best consultancy and let the experts take care of all the legal and complicated matters on your behalf.

Consult The Experts Instead of Sticking To Committing Mistakes!

If you are facing any of the above issues, you might end up earning huge losses for your business. Return filing is introduced to maximize the profitability of the businesses. So, instead of earning loss from this, contact the experts to get professional advice and let them take care of all the procedures on your behalf and enjoy higher profitability.