By Daniel Hunter
Independent research commissioned by Sage UK Limited has found that 20% of business owners believe they are missing out on up to £3,000 through not claiming back VAT - enough money to fund a holiday to the Caribbean.
Many business owners are missing out on cash that is rightfully theirs because they don’t understand how to process VAT correctly, or simply because they believe that they don’t have enough time to process claims. Over a third of business owners find filing VAT returns adds significantly to their workload, meaning that they’d rather avoid dealing with claims than save what they are entitled to.
And perhaps a equating the saving to a holidays will be just the incentive businesses need to get this right. Reclaiming small amounts over the course of a year can add up to significant savings that could equal the cost of an amazing summer break.
4% of businesses believe that they could be saving £1,000 to £2,000, enough for 7 nights in a five star hotel in Jamaica! A further 5% believe that they are missing out on over £3,000, meaning 100,000 business owners could save enough money for their business that would be equivalent to taking their whole family to a 4 star resort in Cuba for a week.
"Businesses need to understand that VAT doesn’t have to be such a headache, especially when the savings they’re able to make are so staggering. The process doesn’t need to be as time consuming as businesses believe it to be," Chris Stonehouse, Category Manager at Sage, commented.
"With software solutions available that allow business owners to work effectively from any device and any location, why not make the most of VAT savings? Get the right support and the hours spent working on invoices and returns could be replaced with time spent browsing your next holiday location.”
Introduced in 1973, VAT is a tax that's charged on most goods and services bought in the UK and accounts for £100 billion paid to HMRC every year. Businesses that turn over more than £79,000 each year need to be VAT registered, and claiming back VAT on products and services can save significant money over the course of the year if properly understood.
Businesses under this threshold can also register for VAT voluntarily, and there are several benefits associated with this; for example, easing business deals and being able to reclaim VAT from the last four years of trading.
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