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At Kerry Lehane & Co we know for small and medium enterprises, VAT is one of the most common areas of tax compliance. It is also one of the easiest to get wrong. Errors in VAT reporting can lead to penalties, interest charges, and unnecessary audits. With a clear understanding of the rules and a structured approach to record-keeping, businesses can reduce risk and stay on the right side of Revenue.

Know your VAT obligations
The first step is to establish whether your business is required to register for VAT. Thresholds vary depending on whether you supply goods or services. Once registered, you are obliged to charge VAT on sales, issue compliant invoices, and file periodic returns. Many errors stem from businesses not keeping track of their obligations as they grow.

Avoid common mistakes
A number of recurring issues cause problems for SMEs. These include charging the wrong VAT rate, reclaiming VAT on non-deductible expenses, and missing filing deadlines. Businesses often struggle with cross-border transactions, particularly when dealing with the EU’s rules on goods and services. Another frequent error is failing to keep sufficient backup documentation, which is required to support claims and deductions.

Maintain accurate records
VAT compliance depends on good record-keeping. All invoices, receipts, and credit notes should be stored in an organised and accessible way. Revenue increasingly expects digital records, so adopting accounting software that integrates VAT calculations can make a big difference. Accurate records not only help you file correct returns but also provide protection in the event of an audit.

Plan for deadlines
VAT returns are typically filed every two months. Missing a deadline can trigger penalties and interest, even if the error was unintentional. Setting reminders or using automated software ensures you never miss a due date. If you find that a return is incorrect after submission, it is better to correct it promptly rather than wait for Revenue to raise the issue.

Checklist for SMEs

• Confirm if your business must register for VAT
• Apply the correct VAT rates to sales
• Avoid reclaiming VAT on non-deductible expenses
• Keep invoices and receipts properly filed
• Use digital tools to streamline calculations
• File returns on time and correct errors quickly

By understanding where mistakes commonly occur and building systems to prevent them, SMEs can protect their finances and avoid costly penalties. Staying VAT compliant is not simply about avoiding problems. It also builds credibility and trust with customers, suppliers, and Revenue alike.

If you would like to discuss your business needs. Call Kerry Lehane & Co Accountants on 023 8856054 or email info@kerrylehane.com

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