Problems recovering VAT?

Businesses still have problems recovering VAT. This is a saving to which they no longer have access and which, in some cases, can have greater consequences than the mere expense. And who is usually responsible for not recovering this tax?

Sometimes these problems are caused by the actions of third parties, such as unpaid invoices. However, in most cases, it is the organisation itself that is at fault, so the next question is: What is the problem?

What usually causes this type of error related to VAT recovery? The main reason is that the company forgets the obligation to keep documents and loses them, misses deadlines or gets the figures wrong, leading to requests from the tax authorities.

At present, there are a number of ways to avoid finding yourself in a situation where you can no longer be able to recovering VAT, Some of them bring important advantages for the business, which can help it to improve its accounting effectiveness and optimise its financial management.

Are you interested in finding out what the most common problems are and what the best solutions are?

4 drawbacks that make it difficult for you to reclaim VAT

Some of the most frequent reasons why companies are unable to reclaim VAT are the following:

Forgetting to claim the VAT refund in the annual financial year.
Not having the supporting documents, invoices or receipts that allow the submission of the documentation that the Tax Agency requires.
Have any unpaid bills.
Missed deadlines, and not realising four years have already passed, the deadline being set for the VAT refund claim.
These are issues that affect large and small companies alike, but luckily, they have solutions, although different in each case. For example, when the circumstance arises that the four-year deadline is missed, the latter scenario, the way to proceed would be request a refund in writing expressly, provided that the amount of the tax has not been omitted from accounting as “VAT awaiting offset” in previous financial years.

In the case of an unpaid invoice, after six months have passed, which is the necessary period to verify that the debtor is not willing to pay its amount, a credit note is issued which annuls the original invoice, and a copy is sent to the Tax Agency.

Thus, a claim is made, either through judicial or notarial channels, for the unpaid invoice and, finally, it would be enough to include the corrective invoice in the quarterly reporting model.

The first two assumptions mentioned are the most common and the reason why most companies in our country run out of recovering VAT. These are, however, cases that are easily prevented.

Adequate accounting would be enough., automated invoice management and to have the backing of a technological solution that helps to avoid human errors, increase task efficiency and improve document management.

Do you want to forget about your VAT reclaim problems?