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We regularly see how small VAT errors can lead to unnecessary stress, penalties and cash flow pressure for Irish SMEs. VAT remains one of the most closely monitored taxes by Revenue, and even unintentional mistakes can trigger costly consequences. In 2026, strong VAT compliance is more important than ever. Here are five common mistakes businesses should avoid.

1. Incorrect VAT Rates

Applying the wrong VAT rate is a frequent issue, particularly for businesses operating across different sectors or offering mixed supplies. Ireland has multiple VAT rates, and confusion can arise where reduced or zero rates apply. Charging the incorrect rate can lead to underpayments or overpayments, both of which require correction and may attract Revenue attention.

2. Late or Inaccurate VAT Returns

VAT returns must be filed accurately and on time through ROS. Rushing submissions without reconciling figures to management accounts can result in discrepancies. Revenue’s data driven systems can quickly flag inconsistencies, so it is vital to ensure sales, purchases and VAT liabilities align correctly.

3. Claiming VAT Without Proper Documentation

Input VAT can only be reclaimed when valid VAT invoices are held. Missing invoices or incomplete supplier details can invalidate claims. Maintaining organised digital records reduces risk and ensures you can support every deduction if queried.

4. Ignoring VAT on Cross Border Transactions

With increased trade across the EU and beyond, VAT treatment for goods and services supplied internationally can become complex. Failing to account for reverse charge mechanisms or distance selling thresholds can expose businesses to unexpected liabilities.

5. Poor Cash Flow Planning Around VAT

VAT collected on behalf of Revenue does not belong to the business. Yet some SMEs treat it as available working capital. Without proper planning, businesses can face shortfalls when VAT payments fall due. Separating VAT funds and forecasting liabilities in advance can prevent pressure at filing time.

Avoiding these mistakes requires consistent processes, accurate bookkeeping and regular reviews. VAT compliance is not simply about meeting deadlines. It is about protecting your business from avoidable risk and maintaining a strong financial position.

A proactive VAT review can identify weaknesses before they become problems. In an environment where Revenue continues to enhance compliance measures, preparation is the safest strategy.

Disclaimer: This article is based on publicly available information and is intended for general guidance only. While every effort has been made to ensure accuracy at the time of publication, details may change and errors may occur. This content does not constitute financial, legal or professional advice. Readers should seek appropriate professional guidance before making decisions. Neither the publisher nor the authors accept liability for any loss arising from reliance on this material.