VAT4U’s compliance check system helps users quickly identify documents that may be non-compliant for VAT recovery. Below, you'll find an overview of the compliance statuses, how to interpret them, and how they guide your VAT recovery process.

In VAT4U, the term "Compliance" specifically refers to the adherence of an invoice or receipt to the formal requirements in a jurisdiction for VAT deduction or recovery eligibility.

It does not pertain to other compliance topics outside of VAT recovery criteria. Always ensure that invoices meet jurisdictional standards for VAT purposes.

Compliance Statuses in VAT4U

1. Not Verified
This status means the compliance assessment has not yet been conducted for the expense. This can happen if:

• The OCR (Optical Character Recognition) and “Smart Checks” weren’t started after a bulk import of data, or
• OCR information isn’t yet available for the document.

If OCR and Smart Checks haven’t been run, users can start them from the Batch Actions in the Manage Expenses table. Alternatively, OCR and compliance checks run automatically if the user selects this option in the last step of the bulk import process. OCR generally processes around 100 expenses per minute.

2. Incorrectly Charged VAT
This status is a legacy label and is no longer actively used. However, it remains in the filtering options to accommodate older expenses that may still carry this designation.

3. Potentially Not Compliant
When VAT4U detects potential non-compliance, it assigns this status to the document. Non-compliance reasons can vary based on the VAT refund requirements of the country of refund. For example, if VAT4U identifies a document as a credit card slip, it will display “Credit card slip detected” as the non-compliance reason.
Non-compliance reasons are viewable in the Non-compliance Reason column in the Manage Expenses table and when opening the expense in the Data Entry module. The system continuously updates the list of possible non-compliance reasons, which currently includes:

• Missing claimant details
• Missing claimant VAT ID
• Credit card slip detected
• Invoice copy or similar
• Proforma or similar
• Not a VAT invoice or receipt

4. Looks Compliant
When no non-compliance reasons are identified, the system assigns this status. This does not guarantee compliance but indicates that the document appears to meet VAT recovery requirements based on the available data.

Compliant and Not Compliant (User Verification Required)
In the Data Entry module, users can mark a document as “Compliant” or “Not Compliant” based on their judgment. This decision overrides the system's automated checks and assigns either a “Compliant” or “Not Compliant” status to the expense. The system’s compliance checks rely on OCR and machine learning/AI, meaning their accuracy can vary with document quality. To expedite this process, users can also update the compliance status in bulk using Batch Actions.