VAT Pitfalls:How to Stay Compliant and Keep HMRC Happy
VAT Pitfalls: How to Stay Compliant and Keep HMRC Happy
VAT can be one of the trickiest areas of UK tax compliance. With shifting thresholds, Making Tax Digital (MTD) requirements, and different schemes to choose from, it’s easy to make costly mistakes. At ASKFinance, we help businesses set up, manage, and review their VAT processes to ensure accuracy, efficiency, and full compliance with HMRC rules.
Understanding VAT Registration in 2025
The UK VAT registration threshold remains at £90,000 turnover in a rolling 12-month period. If you exceed this, you must register with HMRC within 30 days. Businesses below the threshold can register voluntarily, which may allow them to reclaim input VAT — but only if it’s commercially beneficial.
Common VAT Mistakes to Avoid
Missing the registration deadline and facing penalties.
Claiming VAT on ineligible expenses such as entertaining clients.
Charging the wrong VAT rate (standard 20%, reduced 5%, or zero-rated).
Failing to comply with MTD by not using compatible software.
VAT Schemes to Consider
Flat Rate Scheme (FRS) — simplifies VAT reporting but can reduce reclaim opportunities.
Cash Accounting Scheme — pay VAT only when you receive payment from customers.
Annual Accounting Scheme — spread VAT payments over the year, improving cash flow.
How ASKFinance Helps You Stay on Track
We:
Review your turnover and activities to confirm if and when you should register.
Advise on the most efficient VAT scheme for your business.
Ensure all filings are accurate, on time, and MTD-compliant.
Monitor changes in VAT rules so you remain compliant year-round.
Book a free consultation using the button below, or leave your details via the contact form, and we’ll get back to you promptly.
