VAT is one of the UK Government’s primary sources of income. Unsurprisingly, therefore, HMRC constantly targets taxpayers suspected of not paying the correct amount of VAT. To identify anomalies in a taxpayer’s VAT recording, HMRC officers may carry out a VAT inspection.

If you have received a letter from HMRC notifying you that it intends to open a VAT inspection into your affairs, our specialist HMRC solicitors and barristers are ideally placed to support and guide you through the process. With decades of experience, we will accompany you to any meetings, ensure HMRC’s officers do not act outside their powers, and challenge them if they do. If the VAT inspection uncovers issues with your VAT reporting, we will negotiate the best settlement terms with HMRC on your behalf.

For a confidential free discussion, call us today on 01908 414990,  alternatively email us at Hello@altion-law.co.uk or complete our Free Enquiry Form and we will call you back.

 

Why does HMRC undertake a VAT Inspection?

More often than not, a VAT inspection is triggered when HMRC identifies a risk that you have underpaid tax. However, this does not necessarily mean that you have done anything wrong. You may simply operate in a sector identified by HMRC as being high risk, or changes in your business practices may make your VAT reporting appear erroneous when it is not.

Examples of the types of factors that can trigger a VAT inspection include the following:

  • You have a history of not paying VAT or paying your VAT late.
  • You operate in a sector that has a track record of underpaying VAT.
  • Your VAT reports appear to show anomalies, such as an increase in your VAT claims.
  • Your VAT returns appear to be at odds with those submitted by others operating in your sector.

 

How do you know if HMRC plans to carry out a VAT Inspection?

HMRC usually contacts you to inform you that it intends to undertake a VAT inspection and arrange a time for its officers to visit. Usually, you will be given seven days’ notice of HMRC’s attendance, and you can ask them to delay the visit if you need to.

HMRC may write to you or contact you by phone. If you are unsure that the call you receive regarding a VAT inspection is genuine, you can phone the VAT helpline to confirm. Crucially, HMRC will already have your name and the name of your business when they call and will not ask you for any personal details or bank details. If the caller does, you should not disclose any information and contact the VAT helpline.

HMRC can also turn up unannounced to undertake a VAT inspection, but this is fairly uncommon.

 

What happens at a VAT Inspection?

During a VAT inspection, HMRC officers will carry out ‘compliance checks’ to inspect your VAT records and confirm that you are paying and reclaiming the correct amount of VAT. If the officers identify any issues with your VAT reporting, they will discuss them with you and explain the next steps. If you need to pay any additional tax or penalties, they will tell you how much you owe.

 

What happens after a VAT Inspection?

 What happens after a VAT inspection depends on what the officers uncover in your VAT reporting. If everything is as it should be, HMRC will close the VAT inspection. If HMRC uncovers errors in your returns, they will work with you to improve your record keeping and VAT reporting to avoid you making the same errors in the future. It may also impose a financial penalty. The penalty imposed will depend on HMRC’s perception of the reasons for your errors. If they believe you made them deliberately, the penalty imposed will be higher than if they think the errors were due to an honest mistake. If HMRC discovers fraud, the matters is far more serious, and you may face unlimited fines and imprisonment.

If you disagree with HMRC’s findings, you can appeal. Any appeal must be lodged within 30 days.

 

How can we help with VAT Inspections?

Expert support throughout a VAT inspection will ensure you handle the matter properly and facilitate a smooth and swift resolution. At Altion Law, we have a team of vastly experienced solicitors and barristers dedicated to helping clients navigate all HMRC related matters, including VAT inspections. We will accompany you to the inspection and assist you in answering any queries raised by the officers. In cases where the VAT inspection uncovers errors, taxpayers who have cooperated with HMRC can often receive more lenient penalties than they otherwise might. We have an outstanding track record of negotiating excellent settlement terms with HMRC on behalf of our clients, allowing them to concentrate on the continued success of their business.

For a confidential free discussion, call us today on 01908 414990,  alternatively email us at Hello@altion-law.co.uk or complete our Free Enquiry Form and we will call you back.