So many freelancers and contractors approach Freelancer Accounting (http://www.freelanceraccounting.com) over worries about Value Added Tax (VAT), unsurprising given its reputation as a very complicated tax that is easily misunderstood. Without the assistance of the right PCG accountant, you may struggle to manage your VAT – and now, a study commissioned by Sage shows that significant cash savings are being missed by more than a third of smaller businesses as a result of their failure to claim back the tax, often due to a lack of understanding of the associated rules.
The study found that many of those running smaller businesses are unaware of every item on which it is possible to recoup VAT, resulting in at least half of all owner-managers estimating that they miss out on more than £500 each year. Although business owners tended to be aware that they could deduct tax for everyday office items like stationery and printer ink, they weren’t as likely to know that the same rules applied to certain other purchases, such as petrol. This may explain travel – including that by car – topping the list of the greatest expenses for owners, followed by “food and refreshments” which, like fuel, could also have VAT reclaimed on them in a business context.
Managing director of Sage’s small business unit, Lee Perkins, warned that businesses failing to claim back the VAT to which they were entitled were putting themselves at a competitive disadvantage, adding that “Despite being around for 40 years, the ever-changing nature of VAT has put many business owners off from digging into VAT and fully understanding what can be refunded.” This news suggests the potential value to small traders of enlisting the help of the accountants in Canary Wharf of Freelancer Accounting.
The findings showed that 36 per cent of owner-managers missed out on savings due to the complexities around VAT reclaiming, while 52 per cent think that they and their businesses are down by hundreds of pounds each year as a result of such negligence. It’s all the more of a shame, given the highly efficient and cost-effective VAT service offered by the accountants for contractors of Freelancer Accounting, encompassing the preparation of VAT returns, ensuring that the client is on the most appropriate scheme, representation of the client in meetings with HMRC, dealing with all HMRC correspondence and assistance for the client with registering for VAT.
As a highly regarded provider of fixed fee accountancy services, Freelancer Accounting (http://www.freelanceraccounting.com) can ensure that small traders across London and the South East of England benefit from the most informed and tailored advice on their VAT situation. Contact us now for the help that you need to better understand the reclaiming of VAT.