Compliance with VAT: Supplementary Returns and Private Car Usage
Here are some quick tips for if you've forgotten or 'forgotten' to pay all or part of the VAT you were due. I've seen this happen and it can get you in a sticky situation. But with the right approach you can get yourself out of it again too fairly easily.
Supplementary VAT Returns: Correcting Errors
Have you inadvertently failed to pay 1,000 euros or more in VAT? You can rectify this by submitting a supplementary tax return. Mistakes happen, but it's essential to address them promptly.
Some self-employed individuals may overlook declaring significant amounts in their VAT returns, resulting in underpayment.
To rectify such errors, your accountant can assist in filing a supplementary return using specialized software.
Handle it yourself
Alternatively, you can handle it personally by accessing the tax authorities' website with your credentials. If the adjustment is less than €1,000, it can be included in the subsequent quarter.
Special case: VAT on Private Car Usage
Self-employed individuals often face challenges concerning VAT on private car usage. If you use a company car, you must declare and pay VAT for any private use.
When recording such transactions, declare a percentage of the car's list price as VAT due. If you're self-employed with a car used only for business purposes for up to five years since its first year of use, a specific rate applies for the private use calculation. Ask your accountant, bookkeeper, or local tax-authorities for more info; they can guide you.
Example Story: Sarah and Her Company Car
Sarah runs a successful consulting business, providing marketing services to various clients. As part of her business arrangement, she has a company car for both business and personal use.
One sunny afternoon, Sarah decides to take a break from work and use her company car to visit her friend who lives in a nearby town. She enjoys the drive, stopping at a little café along the way. While sipping on her coffee, Sarah realizes that she's using the company car for personal purposes.
As a diligent self-employed individual, Sarah understands the importance of compliance with VAT regulations. She knows that she needs to declare and pay VAT for the private use of her company car.
Upon returning to her office, Sarah meticulously records her business and personal mileage for the quarter. She also notes the list price of the company car and calculates the portion of VAT applicable to its private use.
In her VAT return for the quarter, Sarah ensures to declare the VAT amount corresponding to the private use of her company car. This ensures that she remains compliant with VAT regulations and avoids any potential penalties or fines.
Reflecting on the experience, Sarah realizes the importance of maintaining accurate records and adhering to VAT guidelines, even for seemingly minor aspects like private car usage. It's a small price to pay for the peace of mind and integrity of her business operations.