VAT Inspections & Tips for a VAT inspection

What is a VAT inspection?

HMRC may carry out a VAT inspection at your company to assess its VAT records, with an aim of assuring compliance and making sure you pay the right amount of VAT.

HMRC usually notifies businesses prior to their arrival so that an inspection appointment can be arranged with them; however, they may arrive without prior warning or appointment as well. Kangs Solicitors is an established and vat investigation specialist law firm, with branches in London, Birmingham, and Manchester. Specializing in commercial litigation, insolvency proceedings and civil fraud issues; asset recovery; freezing orders to recover property as well as Intellectual property disputes is what this firm excels at.

Tips for a VAT inspection?

Get the inspection on your terms

As soon as your business is busy, the last thing you want is to have to arrange a vat inspection within the next week. Our solution? Contacting HMRC directly and asking them for extensions when our clients require more time gathering information from frozen storage or performing inspection in our office – much preferable than having inspectors come directly to your workplace and potentially disrupt customers, suppliers and employees with inspection. Although it won’t always go smoothly, try your best to arrange the inspection at a date and time that works for you and arrange it as quickly as possible as vat officers tend to work closely with businesses on this front! We found them eagerly enthusiastic when working together on this front with businesses when working alongside them – working together makes for positive working relations with vat officers keenly working with businesses with regard to inspection.

Be upfront and honest at the very beginning of a vat inspection

Mistakes happen in business; mistakes include attributing vat to items it wasn’t supposed to, or failing to collect vat from customers for some reason. Should an error have been discovered prior to a vat inspection taking place, it is vital that you notify the vat inspector immediately of their discovery.

Make sure you have insurance that covers the inspection

Preparing, participating and then following inspections requires assistance from your accountant. Even though you’ve likely paid them for multiple services in the past, not all will likely be covered by vat inspection insurance policies; so it is wise to inquire with them whether they possess such coverage themselves or whether any company they belong to does offer it as part of their contributions.

Get your business onto online accounting – Xero and Receipt Bank

With one click, you will gain access to your sales receipts, customer data bank records, VAT records and purchase invoices in Xero as well as Receipt Bank saving each invoice within its archive for you. Thus you are in an advantageous position where preparing records takes less time, and information is readily available quickly for vat inspectors which saves them considerable time and effort.

Learn from the experience and implement any suggestions made by the inspector

HMRC often highlights an aspect or issue for a business to address; however, this doesn’t always lead to fines being levied. Therefore it is vitally important that these issues are taken note of and rectified as quickly as possible, otherwise another inspection could ensue with penalties applied again for making similar errors.

How far back can HMRC investigate VAT?

HMRC cannot examine records dating back four years unless their inspection reveals fraud; in such instances they can inspect records dating up to twenty years ago; however a VAT examiner might only review one return if eligibility to claim back VAT refund has been confirmed.

How long does a VAT inspection take?

HMRC inquiries about VAT or another tax can take as long as necessary to reach their intended results, depending on its complexity and size of your company. An HMRC inspector typically checks VAT records on-site in between one to four days; after which an examiner may ask you for more details or submit queries of his own; you are then usually given the chance to respond with your responses as necessary.