The 5 Most Common Tax Mistakes SMEs Make—And Meghdad Tabrizian’s Tips to Avoid Them

Running a small or medium-sized enterprise (SME) comes with endless challenges—from managing cash flow to hiring the right team. But one area where even the most capable founders slip up is tax compliance. Whether in the UK or UAE, tax mistakes can lead to penalties, lost opportunities, and regulatory headaches.

Drawing on over a decade of experience across London and Dubai, Meghdad Tabrizian, a cross-border tax expert and founder of Tabrizian Tax Advisory, has helped countless SMEs stay compliant and strategic with their finances. In this article, Tabrizian shares the five most common tax mistakes SMEs make—and how to avoid them.

⚠️ 1. Ignoring Tax Planning Until It’s Too Late

Many SME owners treat taxes as an afterthought—something to deal with at year-end. According to Meghdad Tabrizian, this reactive approach can lead to missed reliefs, inefficient structures, and avoidable liabilities.

“Tax planning should be embedded into your business model,” says Tabrizian. “Startups and SMEs that think ahead benefit from lower tax burdens and fewer surprises.”

✅ Tip: Build a quarterly tax review into your financial routine, especially if you’re operating in multiple jurisdictions like the UK and UAE.

❌ 2. Misclassifying Expenses or Income

Incorrectly categorizing business expenses or revenue streams is a frequent issue—particularly in companies without a dedicated finance team. In the UK, this can lead to overstated profits and excess tax payments. In the UAE, misclassifying VATable supplies can result in FTA penalties.

Meghdad Tabrizian often sees businesses lose thousands due to simple accounting errors.

✅ Tip: Invest in proper bookkeeping from day one. Use accounting software and have your chart of accounts reviewed by a tax advisor familiar with your local regulations.

🧾 3. Failing to Register or Comply with VAT Obligations

VAT compliance is non-negotiable in both the UK and UAE. Yet many SMEs delay registration, file incorrect returns, or misunderstand exemptions.

“One of the most preventable issues I see is businesses overlooking their VAT thresholds,” notes Meghdad Tabrizian, who holds an advanced diploma in UAE VAT Compliance.

✅ Tip: Monitor your taxable turnover closely. In the UAE, the mandatory threshold is AED 375,000; in the UK, it’s £85,000. Even if you fall below the threshold, voluntary registration may be beneficial for input VAT recovery.

🔁 4. Overlooking Cross-Border Tax Rules

If your business operates across borders—even digitally—you may be subject to double taxation, withholding tax, or transfer pricing rules. SMEs often assume their size exempts them from these complexities, but regulators don’t agree.

Meghdad Tabrizian’s MSc thesis at the University of Oxford focused on Double Taxation Treaties, giving him a unique perspective on cross-border structuring.

✅ Tip: Don’t rely on local tax knowledge alone. Work with a specialist who understands both UK and UAE tax laws to avoid unintended exposure.

💼 5. Mixing Business and Personal Finances

This one’s simple but surprisingly common: using personal accounts for business transactions (or vice versa). Not only does it complicate bookkeeping, but it also increases audit risk and muddies your tax position.

Meghdad Tabrizian emphasizes the importance of financial clarity.

✅ Tip: Keep your business and personal finances completely separate. This becomes especially important if you’re raising investment, applying for funding, or going through a tax audit.

Final Thoughts from Meghdad Tabrizian

Tax doesn’t have to be intimidating. For SMEs, the key is early awareness, clean systems, and proactive advice. As the founder of Tabrizian Tax Advisory, Meghdad Tabrizian offers tailored tax solutions that simplify compliance and unlock strategic benefits—especially for those operating between the UK and UAE.

Avoiding these five common tax mistakes not only protects your business—it sets the foundation for confident growth.