Why Your Input VAT Claims Might Be Rejected and How to Fix Them

No harm, no foul? Not quite. Despite the significant immediate financial loss that rejected VAT claims mean for a business, there are other consequences that can’t be ignored. Not only do rejected claims throw a spanner in the works when it comes to the immediate expected additional revenue, but they may also add unnecessary administrative pressure on your team. This additional administrative burden is largely attributed to reviewing rejection notices, gathering additional supporting documentation, and potentially going through the appeals process. 

This further incapacitates the finance team, who are already stretched from dealing with other critical business objectives. 

In addition, despite losing the opportunity costs that a rejected VAT reclaim may hold, seeing as the expected cash-flow injection is on pause, in some jurisdictions, penalties or interest charges may apply if claims are rejected due to incorrect or late refund claims. 

Lastly, tax authorities aren’t all that thrilled about incorrect, non-compliant, or incomplete claims. Therefore, in order to avoid popping up as a red flag on your local tax authority’s radar or increasing the likelihood of a tax audit, it’s best to mitigate any chance of rejected claims. This starts with understanding the common pitfalls when submitting your input VAT claims.