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VAT Compliance and Inspection

Reasons for your VAT inspection

It’s rare that HMRC will visit a business for no good reason, so the VAT inspection will most likely be because of one or more of the following reasons:

  • Your business industry is being targeted by HMRC as a ‘high risk’ sector
  • To verify your suppliers
  • To verify your customers
  • Your tax returns have failed a HMRC credibility check
  • HMRC have been made aware of information regarding your business
  • Your and/or your business has a history of non-compliance with VAT legislation

What can I expect from the VAT inspection?

On the date/s of the VAT visit, the owner of the business needs to be present, as well as anyone else who handles the accounts, such as a finance director. Although you, as the owner, doesn’t have to be present for the entire process, you should still be available to answer any questions.

It’s normal for just one officer to attend your inspection, although this depends on the size and/or complexity of your business. In some cases, where the workload needs to be shared for example, there may be additional officer present.

During the VAT inspection, the HMRC officer may ask for copies of certain documents if they feel it is necessary to examine them in more detail at their office. It’s important to remember that the officer has the right to take these copies. However, they can only take documents which have been handed to them, or that they have inspected previously.

Remember: If the HMRC officer wishes to take original documents, ensure you get a full and detailed receipt of everything that has been removed. However, if this happens, we recommend calling us during the inspection to obtain legal advice.

After the VAT inspection

After the VAT inspection, you will receive a letter detailing any concerns that HMRC has with your business, including any VAT you owe. You may also be issued with a penalty. If the letter contains anything you don’t understand, or if you disagree with any of the information stated, please don’t hesitate to contact one of our tax solicitors.

If a VAT assessment has been issued by HMRC, this means that you have two options:

  • Pay the VAT amount that is overdue or over claimed
  • Dispute the assessment

If you choose to dispute the assessment, you will need to ask for a review, which may result in a Tribunal Appeal. At this point it is essential that you seek legal advice from a professional to assist you with the process.

How DPP Business & Tax can help

Our dedicated team of business & tax solicitors have years of experience in handling HMRC dispute cases and inspection outcomes. If you’re facing a VAT inspection, are disputing an assessment or are in any way concerned about a HMRC-related matter, contact a member of our expert team today.

In recent years there has been an increase in VAT inspections, as HMRC push to ensure that every business in the UK is compliant with tax and VAT legislation. A VAT inspection can be a stressful time for any business owner, but with the right preparation and knowledge, the inspection can cause minimal disruption to you and your business.

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