A VAT officer is watching when you least expect it…

It’s a scary thought, isn’t it? But, unfortunately, when it comes to your business and the VAT officers at HMRC, it’s an all too common reality.

Of course, there’s a number of arguable reasons why your business may be under surveillance; for starters, and for one reason or another, HMRC may believe you’ve misdeclared your tax and VAT records.

But unlike the already-concerning aspects of HMRC’s standard information-gathering tactics, the thought of a surveillance operation on top of it all? It doesn’t exactly put you at ease, does it?

Well, don’t fret. Because today, we’re giving you the lowdown on how HMRC conducts their surveillance operations when it comes to your business, your VAT records, and what’s likely to come next.  

So, without further ado?

A Breakdown of HMRC Surveillance Operations.

Now, first and foremost? We should probably clear one thing up as soon as possible. And hopefully, it’ll put a lot of readers at ease.

Because the fact is, when it comes to HMRC and their surveillance tactics, they talk the talk, but they don’t – and CAN’T – walk the walk.

What do we mean by this?

Well, ‘surveillance’ as a term conjures up all sorts of imagery, doesn’t it? It conjures up someone wire-tapping your phone or searching through your office in the dead of night.

But actually? This isn’t going to happen.

And really speaking – the good news?

HMRC can only undertake surveillance operations and investigations by doing one thing: being a patron of your company.

So if you’re doing everything you should? If you’re staff are taking payments and recording receipts, too?

You’re golden. And what’s more, you’ve made a nice new customer in an HMRC officer!

Not bad at all, really, is it?

Because mostly speaking, VAT surveillance operations are undertaken by HMRC with one of two types of activity. The first we just mentioned? Test purchases.

And the second? Observations of the premises and your staff.

Ultimately, once again, if you’re following the rules – as you should be – you’ll come out fine. Because these styles of surveillance? They’re pretty low-key, aren’t they?

In fact, unless you’ve reason to believe you’re about to be investigated or have already been given a notice of a VAT inspection, you probably won’t realise they’ve even been there.

Unless they’ve any reason to suspect you’ve misstated your VAT records, that is. But if you’re concerned about this type of visit?

Check out our recent post.

Still, if HMRC have been at your premises and you haven’t heard anything back?

It’s only good news.

But either way, what happens next?

What happens after HMRC have completed a surveillance operation?

Generally speaking, after making a test purchase at your business – watching the staff and noting how they process payments and receipts – the VAT officer will then complete a written report. Sometimes, this might be referred to as a witness statement, and it usually helps decide whether your business is investigated any further.

So what does this statement include?

  • What the officer purchased, along with the receipt.
  • A notation of how your business takes cash and how your staff deal with cash and credit card receipts.
  • The number of patrons at a certain time.
  • And, finally, the general atmosphere of the business.

Now, you may be thinking that first two details above seem fairly obvious. But the last two? They might raise some brows.

But once again, there’s nothing here to worry about.

And why?

Because even though your investigator is looking for reasons to believe a business is suppressing the value of their sales and profits, ultimately, they can only act once they have all the facts.

So even if HMRC wrongly launch an investigation or a VAT assurance visit following their surveillance operation? If their VAT officers don’t find anything in their subsequent search, then nothing will happen. You’ll be left to do what you do best: running your business.

But how long do VAT surveillance operations take?

Once again, it’s hard to say for certain. But most of the time, this type of surveillance – test purchases and visual examinations of staff and money-based activities? They’ll only last a few days.

Unless you own a large business that’s suspected of several large misdeclarations.

Then, unfortunately, you’re looking at a period of weeks, just for the VAT officers to gather information and collect their thoughts.

Still, once again, even if a test purchase is followed by an assurance visit, HMRC are only looking to compare their surveillance findings against your VAT record receipts and sales. So, really speaking?

You only have to worry if you think you’ve wrongly declared your VAT information.

And if you have?

Well, it’s time to take stock. Because this surveillance operation could turn into an assurance visit. And then? A full-blown tax investigation.

So as we always say, it pays to be prepared.

It pays to get your affairs in order now, so you don’t have to worry later.

And if this is a current concern of yours? Let us help.

So what can I take away from this if I’m facing a VAT inspection?

Ultimately, it’s best not to worry yourself about the off-chance of a surveillance visit from HMRC. Because all they’re looking out for?

Signs that your business is running as it should. Signs that your staff are taking cash and card payments in a legal and organised manner.

Other than that? You’re HMRC officer is just another paying customer. And even if an assurance visit is quick to follow? A full tax investigation, even?

Don’t sweat it. Because we’re here to help.

So if you find yourself worrying about a VAT inspection or a tax investigation?

Get in touch. We’ll give you peace of mind.

The Tax Haven.

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