Submitting VAT tax returns online has become the standard for UK businesses since HMRC introduced the Making Tax Digital (MTD) initiative. While filing online is intended to simplify the process, many businesses still find it stressful and, in some cases, costly due to errors. Mistakes in VAT returns can lead to HMRC penalties, interest charges, and even delays in reclaiming VAT that your business is entitled to.

Fortunately, most of these mistakes are avoidable with the right knowledge, preparation, and support. In this guide, we’ll cover the most common mistakes businesses make when submitting VAT tax returns online, and how working with experts such as The Infinity Group can help you remain compliant and confident when filing.

Why Online VAT Returns Matter

Since April 2019, most VAT-registered businesses in the UK have been required to file VAT returns online as part of Making Tax Digital (MTD). This system is designed to reduce human error by using approved software that links directly to HMRC’s systems.

However, digital filing doesn’t automatically eliminate mistakes. Businesses still need to ensure that the information they enter is accurate, records are well maintained, and VAT rules are correctly applied.

Common Mistakes to Avoid When Filing VAT Returns Online

1. Incorrect VAT Registration Status

Some businesses fail to register for VAT at the correct time, while others remain registered even when their turnover falls below the threshold. If your business turnover exceeds £90,000 (2025 threshold), you must register for VAT. Filing without proper registration, or continuing to file when deregistration should have occurred, can trigger HMRC issues.

How to avoid it: Always monitor your business turnover against the VAT threshold and update your status with HMRC promptly.

2. Using the Wrong VAT Rate

VAT rates vary: standard (20%), reduced (5%), and zero-rated (0%). Misapplying these rates is one of the most common errors. For instance, some items in construction or hospitality may be zero-rated or reduced, while others fall under the standard rate.

How to avoid it: Double-check the correct VAT treatment for your products and services. Professional advisors like The Infinity Group can help businesses in sectors such as construction, retail, and contracting ensure they’re applying VAT rates correctly.

3. Poor Record-Keeping

Even with online filing, inaccurate or incomplete records can result in errors. Common issues include missing invoices, duplicate entries, and unrecorded expenses.

How to avoid it: Keep digital records of all sales and purchase invoices. Using MTD-compatible software ensures records are updated automatically and reduces the risk of human error.

4. Missing Filing Deadlines

VAT returns are typically submitted quarterly, and missing the deadline can result in fines, surcharges, and potential scrutiny from HMRC. Many businesses still struggle to track their deadlines.

How to avoid it: Set reminders well in advance of the VAT due dates. Outsourcing VAT return services to firms such as The Infinity Group ensures returns are always filed on time.

5. Failing to Reconcile Bank Accounts with VAT Records

A common mistake is submitting VAT returns without reconciling your bank statements, invoices, and accounting records. This can lead to discrepancies that may raise red flags with HMRC.

How to avoid it: Always reconcile financial data before submitting. Professional accountants will check for mismatches to ensure accuracy.

6. Overclaiming Input VAT

Businesses are entitled to reclaim VAT on eligible business expenses, but overclaiming—whether by mistake or misunderstanding—can lead to HMRC penalties. For example, VAT cannot usually be reclaimed on client entertainment or certain types of vehicles.

How to avoid it: Understand what expenses are eligible for VAT reclaims. If in doubt, seek guidance from professionals such as The Infinity Group, who specialise in VAT compliance.

7. Not Accounting for Reverse Charge VAT

In industries like construction, the reverse charge for VAT shifts responsibility from the supplier to the customer. Many businesses forget to apply the reverse charge when required, resulting in incorrect returns.

How to avoid it: Stay up to date on VAT rules for your sector, particularly construction and contracting. Working with a VAT expert ensures compliance with niche rules like the reverse charge.

8. Relying on Manual Calculations

Even when filing online, some businesses still rely on manual spreadsheets. This increases the risk of inputting the wrong figures into HMRC’s system.

How to avoid it: Use MTD-approved accounting software that automatically pulls data from your records into the VAT return. Professional VAT services providers like The Infinity Group use reliable systems that reduce the risk of manual errors.

9. Ignoring HMRC Notices or Queries

If HMRC spots discrepancies in your return, they may issue a query. Ignoring or delaying responses can escalate the situation into penalties or investigations.

How to avoid it: Always respond promptly to HMRC queries. Outsourced providers will handle correspondence on your behalf, giving you peace of mind.

10. Not Seeking Professional Help

Many businesses assume VAT returns are simple enough to handle internally, only to realise too late that errors have cost them money or triggered HMRC penalties.

How to avoid it: Consider outsourcing VAT return services. The Infinity Group provides end-to-end VAT support, from accurate record-keeping to timely submission, helping UK businesses avoid costly mistakes.

How The Infinity Group Helps Businesses Stay Compliant

VAT can be daunting, especially for small businesses, contractors, and construction firms with complex transactions. This is where professional support makes all the difference.

The Infinity Group works closely with UK businesses to:

• Ensure VAT returns are submitted accurately and on time.
• Apply the correct VAT rates across industries.
• Reconcile financial data to avoid errors.
• Provide guidance on MTD-compliant digital record-keeping.
• Handle HMRC correspondence on behalf of clients.

By outsourcing VAT return services to The Infinity Group, businesses can save time, reduce stress, and avoid the pitfalls of common filing mistakes.

Final Thoughts

Submitting VAT tax returns online may seem simple, but it carries risks if handled incorrectly. From misapplying VAT rates to missing deadlines, errors can lead to financial penalties and wasted time.

The good news is that these mistakes are avoidable with proper planning, digital tools, and expert guidance. For UK businesses that want peace of mind, outsourcing VAT returns to a professional provider like The Infinity Group is one of the smartest decisions.