What to do if your business is inspected by HMRC.
VAT: If you’re running a business or work as a sole-trader, these three simple letters can become a bit of a headache from time to time. But whether it’s keeping on top of your records or ensuring your paying the right amount of tax, nothing compares to the stress of a VAT inspection from HMRC.
First of all, you might be asking: ‘Just what is a VAT inspection, anyway?!’
And if you’re under investigation from HMRC, what should you do if they come knocking?
Well, fear not. Because today? We’re breaking down all things VAT – so you don’t have to worry.
But even if after reading today’s article, you’re still a little unsure how to proceed with news of your tax investigation? Don’t sweat it. We’re here to help.
Now, without further ado…
Tax Assurance Visits: What should I expect from a tax inspection?
First things first. Just what is a tax assurance visit?
Simply put, a tax assurance visit is a check made on random businesses, with HMRC looking for potentially erroneous and fraudulent tax records.
Of course, tax inspection wasn’t always this daunting. Way back in 1973, HMRC conducted their first visit to a business to check on their tax records. At the time, this kind of visit was undertaken to make sure that new businesses and business owners could fully comprehend their obligations for paying their fair share of VAT.
But since then? Things have changed. These days, tax assurance visits – visits made to assess the risk of fraudulent tax returns – are usually scheduled due to a computer-based model. And the officers themselves? They’re looking for trouble, not seeking to assure you like the days of yore.
Nevertheless, there’s no need to fear; whether you’re a small business that’s yet to receive your first visit, or a large company who’s dealt with HMRC many times, HMRC work under strict guidelines when launching an inspection of your business.
And ultimately? They’ll only be looking at materials and records that you should have to hand. Records you should have been keeping in order: your VAT returns and any other relevant information.
Back to the topic at hand.
How will HMRC get in touch?
Time for some good news. Because the idea of a tax assurance visit doesn’t sound like the most fun day on the job, does it?
Fortunately for you, however, for the first visit? HMRC’s booking team will ring to get in touch, seeking a reasonable time to conduct the meeting.
And how much notice will you get?
Seven days. Normally. Which should give you plenty of time to prepare. And if you’ve just been given notice of your first visit? Check out our FAQ. Get reading. Or simply get in touch.
But what will happen at my VAT inspection?
When your officer first arrives, he or she will be carrying an ID card – a card you should always inspect in case someone’s trying to pull a fast one and discover private information about your business.
But once that’s out of the way – once you’ve offered them a cup of tea, even? These visits are usually split into three parts.
So here’s a rough guide of what to expect.
First, there’ll be some general questions about the business’s structure—how you operate and the general state of your VAT account.
Second? The HMRC officer will perform a check of your VAT account, studying a detailed overlook of at least one VAT period.
Finally, then, your officer will proceed to check an overview of the business accounts—usually checking the credibility of your recorded tax figures.
This sounds like an interrogation…
We know, we know. But still, with our help and advice? You won’t have to worry. And the type of questions they are going to be asking you, following the above guidelines?
The information and answers you have to provide can be delivered in a general discussion – a simple chat covering things like who’s in charge of the business’s VAT, a description of the business activities, and the general structure of the business.
Of course, the questions you’ll be asked will differ from interview to interview and officer to officer. But the important thing to remember is that, ultimately, if you’re polite and compliant?
You’ll do just fine.
Even when it comes to the final walk around, (a quick inspection of the premises by your HMRC officer), as long as you’ve been open and honest, your inspection will be over before you know it.
So what can I take from this if I’m facing a VAT inspection?
When the phone-call finally comes and you discover that a VAT inspection is unavoidable, it’s best to take stock. As we always say, it pays to be prepared. So following your first notice call to arrange the meeting?
Take the next week or so to get your records together. Familiarise yourself with the above interview structure.
And ultimately? Get ready to answer some simple questions, safe in the knowledge that, if you remain polite and compliant, everything will go just fine.
Still, if you’re worried about an upcoming VAT inspection? Fear not. We’re here to help.
Get in touch. We’ll give you peace of mind.
The Tax Haven.