VAT returns are one of the most common areas where businesses make costly mistakes.
Even small errors can lead to HMRC penalties, VAT inspections, or overpaying VAT.

Here are the 5 most common VAT return mistakes and how to avoid them.

Mistake 1: Missing VAT Deadlines

VAT returns are usually submitted quarterly. Missing a deadline can result in:

Late filing penalties

Interest charges

Compliance checks

Mistake 2: Claiming VAT on Non-Allowable Items

Some items don’t allow VAT recovery, such as:

Business entertainment

Certain personal-use expenses

Some vehicle-related costs

Claiming VAT incorrectly can trigger HMRC review.

Mistake 3: Incorrect VAT Scheme Use

Many businesses use the wrong VAT scheme, such as:

Flat Rate Scheme

Standard VAT Scheme

Cash Accounting Scheme

Using the wrong one can cause incorrect VAT payments.

Mistake 4: Not Keeping Proper VAT Records

HMRC requires proper evidence, such as:

VAT invoices

Receipts

Digital records (especially under Making Tax Digital)

Missing records can result in penalties during audits.

Mistake 5: Errors in VAT Calculations

Simple mistakes like:

entering the wrong figures

using gross instead of net

duplicating invoices
can lead to incorrect VAT submissions.

Conclusion

VAT mistakes are avoidable — with the right support.
At RedTax Accounts Ltd., we handle VAT returns accurately and on time.