Mythbusters: VAT is Just an Extra Cost – The Truth About Claiming It Back

Welcome to the latest installment in our blog series, where we break down the myths surrounding VAT and help businesses like yours maximise their financial efficiency. At Black & White Accounting, we believe that knowledge is power—especially when it comes to tax matters. Today, we’re tackling a common misconception: that VAT is just an extra cost you have to bear. Spoiler alert—it doesn’t have to be!

Understanding VAT: More Than Just an Extra Expense

Many business owners see VAT as an unavoidable cost, eating into their hard-earned profits. But here’s the truth: if you’re VAT registered, VAT shouldn’t be a cost at all—it’s a transactional element that you can (and should) be reclaiming on eligible purchases. The key is understanding how to navigate the system efficiently and ensuring you’re claiming back every pound you’re entitled to.

The VAT Reclaiming Process – Simpler Than You Think

If your business is VAT registered, you can reclaim VAT on most business-related expenses, provided you have the right documentation. But many businesses miss out on reclaiming VAT simply because they don’t know what qualifies or they fail to keep proper records.

Here’s how to make sure you’re reclaiming all that you’re owed:

1. Keep Your Receipts & Invoices – Ensure all business purchases come with VAT invoices that clearly state the VAT amount.
2. Know What’s Claimable – You can reclaim VAT on things like office supplies, professional services, and even some travel expenses, but you cannot reclaim VAT on client entertainment or personal expenses.
3. Submit Timely Returns – Avoid penalties and cash flow issues by staying on top of your VAT return deadlines.
4. Use Digital Tools – With Making Tax Digital (MTD) in full swing, using accounting software can streamline your VAT calculations and submissions.
5. Seek Expert Guidance – An experienced accountant (like us!) can ensure you never leave VAT unclaimed.

Common Pitfalls and How to Avoid Them

Even the most diligent business owners can fall into VAT traps. Some common mistakes include:

• Not registering for VAT when you should – If your turnover exceeds £90,000 (as of 2024), you’re legally required to register.
• Missing VAT reclaims on mixed-use purchases – If you use something for both business and personal use, you may still be able to reclaim a portion of the VAT.
• Overlooking foreign VAT reclaims – If you travel for business and pay VAT abroad, you might be able to reclaim it through the VAT refund scheme.

Maximise Your VAT Efficiency with Black & White Accounting

VAT doesn’t have to be a burden—it’s an opportunity to reclaim costs and boost your bottom line. At Black & White Accounting, we help businesses navigate VAT complexities with ease, ensuring you claim everything you’re entitled to while staying compliant.

If you want to stop VAT from being an ‘extra cost’ and start seeing it as an opportunity for savings, get in touch with our expert team today. We make VAT simple, so you can focus on growing your business with confidence.

Stay tuned for the next post in our blog series, where we’ll debunk more VAT myths and help you take control of your finances like never before!