Common VAT return mistakes that can expose you to a fine

Most companies that get fined on VAT aren't deliberately evading the tax — the problem is usually small accounting practices that repeat every filing period without anyone noticing, until they accumulate and surface during an FTA review or audit.

One of the most common mistakes is mixing up exempt supplies and zero-rated supplies. Both get different treatment on the return even though neither actually carries tax due, and confusing the two skews the return's figures without an immediate visible impact on the amount owed.

Another widespread error is recovering input tax on items that are actually blocked — entertainment expenses or certain categories of vehicles, for example — just because the invoice happens to show VAT, when recovery isn't always permitted regardless. There's also a common mismatch between output tax and the invoices actually issued, especially when invoices are cancelled or amended without a proper credit note documenting the change.

Services or goods imported from outside the country also need special treatment (the reverse charge mechanism), and many companies overlook it entirely simply because there's no local VAT-bearing invoice to prompt them — so it's left off the return altogether. Finally, a tax invoice missing a mandatory field — the tax registration number or the actual date of supply, for instance — weakens the company's position even when the overall figure on the return is correct.

For anyone who wants to confirm their tax file is clean before a notice from the FTA ever arrives, RASEEKH offers a free check to match your tax data against your actual records — we review your returns against your real books and flag any error or practice that could cost you a fine before it turns into an actual problem.