A fast-growing UK tech company was spending heavily on US software and ads to fuel its growth. They didn’t realise a simple VAT mistake was making every single one of those invoices a compliance risk.
👇 Here’s how we fixed the error that was costing them thousands.
The Problem: The “No VAT on the Invoice” Illusion
When they received invoices from suppliers like Google, Meta, or AWS, they saw no VAT listed. They assumed no VAT was due and recorded it as a simple expense. This is a critical misunderstanding of the UK’s reverse charge rules, which apply to many services from overseas.
The Solution: Correctly Applying the Reverse Charge
Our team, during a financial review from our office in Brahmapur, spotted the mistake. We explained that for most overseas services, the UK business must act as both the supplier and customer for VAT purposes—accounting for the VAT on their own VAT return.
The Challenge: A History of Incorrect VAT Returns
The error wasn’t isolated—it had been happening for months. Every VAT return they filed for the past year understated their liability, and the potential fines and interest from HMRC were mounting. The company feared that correcting it might trigger an audit or penalties.
The Action: We Corrected the Past & Automated the Future
We calculated the cumulative error and guided them through making a voluntary disclosure to HMRC. We then updated their accounting software (Xero/QuickBooks) with correct tax codes to automatically apply the reverse charge to future invoices, ensuring the issue wouldn’t recur.
The Result: £5K+ Liability Corrected & Penalties Minimized
By proactively fixing the mistake, they avoided harsh penalties and interest that would have come from an HMRC investigation. Their VAT filings became accurate, providing a clearer view of their true costs. The correction alone amounted to over £5,000 in previously undeclared VAT.
Is Your Ad Spend & SaaS Bill a Hidden VAT Risk?
1. Know how to account for VAT on services from Google, Meta, AWS, and other global suppliers.
2. Apply the UK’s reverse charge rules correctly and avoid false assumptions.
3. Avoid costly penalties by ensuring your VAT filings are accurate.
4. Set up your accounting software to automatically handle international invoices.
👉 Paying for overseas software or ads? DM us ‘VATCHECK’ for a free review of your reverse charge process and protect your scale-up from hidden compliance risks.