According to a new study, over a third of all SMEs in the UK are missing out on potential VAT savings simply because they are not aware of how to take advantage of them. The study was conducted by Sage the business software provider and found that about half of all business owners believe they are losing over £500 per year because they do not claim enough.
The VAT is a sales tax that is placed on almost all services and goods that are purchased in the UK and makes up about £100 billion in revenues to HMRC every year. Every business that makes more than £79,000 per year has to be registered for the VAT, but most small businesses are not able to keep up with the always changing VAT laws and regulations leaving 30% of all businesses out in the cold. Most business owners in the survey felt that if they understood the VAT better they would receive more savings.
The research also discovered that the most likely items that SMEs claim on their VAT are printer ink, computers/laptops, telephone contracts, stationary, and fuel. About 70% of the businesses in the survey stated that travel was their largest cost while about ten percent stated it was refreshments and food. Tea, coffee, fuel, and biscuits that are purchased for use at a business can all be claimed on the VAT and can help save businesses over hundreds of pounds per year if claimed properly.
Sage’s managing director of their small business division, Lee Perkins, stated that businesses that do not claim the VAT they are owed are placing themselves at a disadvantage competitively because even thought eh VAT has been around for four decades its changing nature still has stopped many business owners from fully understanding it.