Entrepreneurs who want to get their business off to a flying start need to have a healthy respect for VAT inspectors, says financial and business advisers Grant Thornton.

Despite recent attempts to simplify the notoriously complex indirect taxation system, VAT continues to baffle even the best brains, and many firms submit incomplete or incorrect returns every year.

Ignorance prevents them from taking full advantage of the rebates offered by Customs & Excise, warns Jonathan de Wilton, senior VAT manager at Grant Thornton.

He said: "In view of the rigours of the system, it's not surprising that companies come unstuck, especially when the business is under pressure from other quarters.

"But bosses ignore VAT traps at their peril and could even put their business at risk if they don't pay up. It's galling that many miss out on valuable relief which is rightfully theirs."

His tips include:

**Entertaining staff: Employers can claim back VAT on the cost of entertaining staff - but not guests should they choose to make the event a family affair.

**Fleet management: Many firms believe they can recover all the VAT on a vehicle's basic leasing costs, whereas they are entitled to reclaim only half.

**Accounting documentation: VAT can normally be reclaimed only if a tax invoice is held. Many companies use unauthorised documentation such as pro forma invoices and statements.

**Bad debt relief: Reclaim outstanding unpaid VAT six months after the due date.