By Daniel Hunter
Perceived complexities around reclaiming VAT and a lack of awareness on what goods are tax deductible means more than a third (36%) of the UK’s small to medium sized businesses (SMBs) are missing out on significant savings they are entitled too.
The research from business software and services provider Sage also revealed that over half of business owners (52%) that think they missing out on VAT estimate they are losing more than £500 every year by not claiming for everything they are entitled to.
Introduced in 1973 VAT is a sales tax that's charged on most goods and services bought in the UK and accounts for £100 billion paid to HMRC every year. All businesses that turn over more than £79,000 each year need to be VAT registered.
However, many businesses have not got to grips with the ever changing complexities of VAT, with nearly 30% of the 1,000 business owners surveyed suggesting that a deeper understanding of VAT would help make their firm more profitable.
The research revealed that the most popular items to claim back money on were stationery, printer ink, telephone contracts and computers/laptops, with fuel as the eighth most popular item.
Just under three quarters of the businesses surveyed (71%) cited travel as their biggest cost, whilst for almost one in ten it was food or refreshments. Fuel and tea/coffee and biscuits in a business context are all VAT reclaimable, and could save businesses hundreds of pounds each year.
“Businesses that aren’t claiming back the VAT they are entitled to are really putting themselves at a competitive disadvantage," Lee Perkins, Managing Director, Small Business Division commented.
"Despite being around for 40 years the ever changing nature of VAT has put many business owners off from digging into VAT and fully understanding what can be refunded. But it needn’t be a big task, the software exists today that can make claiming money back from HMRC a five minute job. Businesses need to get their VAT sorted now.”
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