VAT officers can visit your business to inspect your VAT records and make sure you’re paying or reclaiming the right amount of VAT at any time. If they turned up next week, are you confident you are ready?
Generally speaking businesses are selected for a VAT inspection by a computerised selection process based on criteria including the businesses turnover, its trade class and past compliance history. Most small to medium sized businesses only get a visit once every 5-10 years and some may never get a visit at all, however it is best to be prepared and have all your accounts in order should the HMRC contact you to arrange a visit. It also makes good business sense to have your financial housekeeping in order.
It goes without saying that if you submit late or incorrect VAT Returns or the submission of VAT Returns shows that the business is due a VAT repayment (even if the business is entitled to all the VAT repayments), then you are more likely to be on the radar and receive a visit from the VAT man. HMRC will normally make contact 7 days before the visit to arrange it, however they can also turn up unannounced.
From requesting copies of your last annual accounts to checking figures for the last VAT return period, to asking questions about claiming tax back on car fuel or ‘entertainment’ expenses, be prepared for a morning of questions.
A visit from HMRC will almost certainly be stressful, so if they do get in touch, it is best to know everything is already in order. If the HMRC identify errors, they will raise assessments for unpaid VAT, stretching back four years or more, plus interest and penalties.
Speak to KPP about a VAT Health Check and remember that if you use cloud accounting software it will be easier to have everything to hand and up to date. Our VAT Health Check provides an opportunity to review your current process, practices and procedures and brings issues to light if you are not fully compliant, helping to identify risks and opportunities for your business. Make sure your business is prepared, before the VAT man calls.