VAT assessment can cause a huge headache for business owners, with a new report claiming that one in five of those claiming it back have made a mistake, news.silobreaker.com reports.

Business software and services provider Sage has found that more than a million UK company owners reclaim VAT every month. It’s not a straightforward process, however, as around 21 per cent are thought to have made a mistake at one point or another. Similarly, of the 1,015 businesses surveyed, 15 per cent have had a VAT or self-assessment claim queried by HMRC.

Much of this, Sage claimed, was an over-reliance on old VAT recording techniques which were susceptible to errors. Companies were, it claimed, recording VAT outgoings in a basic Excel spreadsheet or using pen and paper. This is despite warnings that such techniques could open up the potential for human error.

It should come as no surprise, then, that VAT claims were dubbed the single biggest headache for business owners or those running a franchise agreement, over the likes of health and safety regulations and business insurance.

The trouble that many reported was the time it took to reclaim VAT. In fact, some 30 per cent of respondents said that doing so added a “fair amount” or “significantly” to their already brimming workload.

Commenting on the findings, director of Sage’s Start-Up and Small Business Division for the UK and Ireland, Lee Perkins, told freshbusinessthinking.com: “Very few people start a business because they are passionate about VAT.

“But by not using the tools that are at their disposal, business owners are allowing VAT to become a time consuming headache, and more importantly leaving themselves open to error when submitting VAT returns. VAT isn’t going away, it’s on the monthly to-do list, so we’re encouraging business owners to look at this now and get on top of it ahead of their next submission.”