VAT Calculator: 5 Best Practices to Maximise Reclaims

The Blue dot Team

Do you pay VAT? Most companies have heard of VAT because they’ve had to pay it on goods or services they’ve purchased.

Do you charge VAT? If your company earns over a certain threshold – currently defined as a taxable turnover of more than £85,000 a year – then you will have to register for VAT and charge it on your own goods and services.

Wait, what is VAT? Value Added Tax, most commonly known as VAT, is a tax placed on almost all goods and services with some exceptions.

If you don’t register for VAT and you earn over the threshold, then you will be found non-compliant and fined by the tax authority. If you don’t earn over the threshold and want to register for VAT, you are allowed to do so. That threshold is only there to define the starting point for VAT.

What about the VAT Calculator? Managing VAT can be a headache. You have to submit your return regularly, usually four times a year or every quarter, and you have to pay your VAT at the same time. Your calculations have to be correct, and your payments have to be on time, or you can get points deducted from your profile that could lead to you earning a hefty fine.

However, you can introduce specific tools and practices that will help you streamline your VAT reporting, maximise your reclaims, and ensure you do all of this on time. One such tool is a VAT calculator, which can help you accurately calculate your taxes and ensure compliance with regulations.

What is a VAT Calculator?

A VAT calculator is a smart tool that helps you determine how much VAT you need to charge your customers on invoices and how much VAT you need to reclaim from the tax authority, and it can help you manage these processes and ensure your VAT returns are accurate. The calculator does all the hard work for you, which makes life a lot easier and helps reduce your admin burden.

5 Best Practices to Maximise Reclaims with a VAT Calculator

Using a good VAT calculator can help you immensely when it comes to staying on top of your VAT. And considering how often VAT regulations and expectations change, it’s a very useful resource for managing VAT and avoiding fines. Thanks to its algorithms and pre-programmed formulas, you don’t need to know the formulas for VAT. Here are 5 important tips to making the most of a VAT calculator:

1) Keep Accurate Records

Thanks to a VAT calculator’s pre-set and pre-programmed settings, you can keep accurate records of your VAT payments and amounts. The calculator will ensure that you get accurate results and always have accurate records for HMRC. You should be able to use your VAT calculator to store a history of VAT calculations so you can reference these if required by HMRC and the Making Tax Digital (MTD) system.

2) Classify Expenses Correctly

One of the challenges to claiming back VAT as a business sits firmly in the land of expenses. If you’ve not classified your expenses correctly, then you can’t maximise your VAT reclaim. Invoices submitted with incomplete or incorrect information aren’t valid for claiming VAT back, but you may need to reimburse your employees, which can result in the business losing money.

Avoid this issue by accepting only original invoices, ensuring that the invoice has the legal name of the company, any vendor details, date and invoice number, and that it aligns with any specific country requirements. You can find out more about these different requirements here. You can use Blue dot’s VATBox solution to streamline your VAT recovery process with smooth invoice management and admin, and use our VAT calculator to work out exactly how much you can earn back from HMRC with your correctly classified expenses.

3) Use a Good Vat Calculator

Several types of VAT calculator are available online, but it’s worth shopping around for a good one before you start inputting all your private company information. A good VAT calculator will be regularly updated to include the latest regulations, changes in VAT expectations, the different VAT requirements for specific items, and it will allow you to factor in multiple countries and their requirements. It should be easy to use, provide an accessible history, and come from a reputable company.  

4) Submit Your VAT Returns on Time

VAT due dates are non-negotiable and important to know. From the moment you register your company for VAT, you must complete a VAT return regularly and ensure that HMRC receives that return on time. If you don’t, you could face penalties and fines that can cost your company money. Want to know how to know your deadlines?

Log into your HMRC VAT Online Account to find out when you need to submit your VAT returns and ensure that your payments are up to date.

Remember: The deadline for paying your VAT and submitting your VAT return is the same!

To avoid unnecessary stress, it’s a good idea to diarise your VAT return deadlines so you can get them done on time and potentially give yourself time to spare if there are any unexpected issues. The VAT return filing penalty system came into effect on 01 January 2023, and you will be affected if you paid your VAT late or submitted your VAT return late. Every time you submit your VAT return late, you will receive one penalty point until you reach your penalty point threshold.

5) Seek Professional Advice

Submitting, managing, storing, accessing and identifying VAT is a time-consuming process that requires meticulous record keeping, an excellent commitment to deadlines, and always staying ahead of your admin. For most businesses, this is a lot of extra work, so you can run the risk of running late and heading into the HMRC penalty system.

To avoid the hassles, it’s worth seeking professional advice and using an online tool or service that’s designed to take the stress out of VAT. A company with a solid background in VAT management that understands precisely what the challenges are, knows how to help you identify VAT, and can help you refine your VAT processes is an absolute lifesaver. Not only will you end up with a solid VAT submission track record, but you may find you can claim back far more VAT than you realised.

Use Blue dot’s Online VAT Calculator

The Blue dot VAT calculator helps you calculate the recoverable VAT and Goods & Services Tax (GST) hidden in your employee spend. You can use the incredibly accurate information provided by our pre-set VAT calculator to potentially receive refunds from HMRC and you can do this in five easy steps. The Blue dot calculator improves compliance with global tax regulations, maximises your VAT reclaim, and is aligned with our VAT compliance platform.

You can also delve into our VATBox solution to maximise your VAT reclaim while maintaining effortless compliance. Our solution has helped companies reclaim thousands in VAT, and we provide you with complete visibility, compliance and data integrity that’s invaluable to ensuring your VAT records and reporting are spotless.

Learn more about digitalized compliance automation for modern employee spend

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