Are you worried about a VAT investigation?

Inspection of VAT Records

Have you received a call from HMRC that they wish to carry out a VAT inspection? Or did HMRC just turn up at your premises unannounced? Whatever the circumstances, our specialists at Templeton Brook Witt can provide prompt advice and guide you through the entire process.

If HMRC have opened a VAT inquiry or would like to visit your business to inspect VAT records, then you can be assured that the inspection is driven by a perceived risk that VAT has either been lost or is at risk of being lost. The purpose of a VAT investigation is to check if you are paying or reclaiming the correct amount of VAT. HMRC carry out risk assessments based around several factors:

• Unusual spike in VAT payments
• Disparity between annual accounts and VAT returns
• Comparative industry checks 
• Higher risk business sectors
• Poor history of VAT compliance
• Information obtained from informants or third parties
  

On-Site Visits

Ordinarily, VAT officers would contact you to arrange a visit in order to inspect your VAT records and make sure you are paying or reclaiming the right amount of VAT. They normally give 7 days’ notice. They will confirm what information they will want to see, how long it is likely to take and if they want to inspect your premises. You can ask them to delay the visit or, due to coronavirus pandemic, agree to provide all requested documents by post or email. Most importantly, do not panic and feel pressured. Our specialist VAT investigation advisors will provide all necessary advice and take the pressure off you. 

In certain cases, HMRC may turn up at your premises unannounced to carry out an inspection as part of their check of your tax affairs. Ordinarily, unannounced visits are typically carried out where HMRC have had either no co-operation with information notices and announced visit requests, or when they believe records may be destroyed should notice of a visit be given. In all cases, unannounced visits must be ‘reasonably required’ for the purposes of the HMRC’s check and carried out at a ‘reasonable time’. Late visits, outside normal office working hours, do not give the individuals being investigated the opportunity to confirm the identity of the HMRC officers.

The HMRC officers must: 

• show you their identification 
• give you a notice of inspection 
• give you a copy of the relevant ‘General information’ factsheet, which tells you about their compliance checks and a factsheet ‘Unannounced visits for inspections’.

The notice of inspection is a legal authorisation that allows HMRC to carry out the inspection. It must be authorised by a senior HMRC officer. The notice must also include (1) the names of the inspecting officers; (2) when the inspection will take place; (3) what the officers are authorised to inspect during the visit.

You may politely explain that a site visit is not convenient at this point and that you will need to seek specialist advice. If however HMRC produce a notice signed by a district judge and you do not allow them to carry out the inspection, they may charge you a £300 penalty and further penalties of up to £60 per day. 

Given that any evidence gathered on these visits can be used in proceedings against you, including criminal proceedings, in our experience, the majority of the unannounced HMRC visits are suggested to be refused. Should you receive a visit, you are entitled to obtain professional advice and representation. 

If you are the subject of an unannounced visit, contact us immediately. Our team provide confidential advice and guide you through the process. 

Appeals and time to pay arrangements

On conclusion of the VAT inspection, HMRC will write to you confirming their findings whether you are overpaying or underpaying your VAT, and any penalty you have to pay. If we consider that there is merit, we can assist with appealing the HMRC decision – this has to be done within 30 days of the date of the decision. Alternatively, we can engage in negotiations with HMRC with the aim to reduce any penalties and agree a favourable time to pay arrangement.

VAT Fraud Investigations

A VAT fraud investigation by HMRC is invariably an extremely stressful and daunting experience, the impact on both business and family life cannot be underestimated.

HMRC operate a selective criminal prosecution policy when fraudulent conduct in relation to VAT evasion is deemed to be serious enough. A number of factors are considered to determine whether a case could be referred to HMRC’s Criminal Prosecution Unit – the Board will look into the nature, extent and gravity of the alleged offences.

Most VAT fraud investigations are conducted using HMRC’s civil evasion powers. In such circumstances, HMRC will seek a financial settlement which will include any tax lost, interest and a penalty. Please note that penalties can be levied retrospectively against director(s) of liquidated companies and can be 100% of any VAT lost. Early intervention by a VAT fraud investigation specialist is critical at this stage.  If you are worried about a tax investigation then call us for a free no obligation consultation today!

We can help you deal with any tax investigation through expert advice and specialist representation. Our team deals with matters ranging from individual tax disputes to large and complex multiple client cases. 

• Formal and Informal Notices
• Compliance Checks
• Penalty Notices
• Discovery Assessments
• Voluntary Disclosures to HMRC
• Accelerated Payment Notices (APNs)
• Code of Practice 8 – CoP 8 Investigations
• Code of Practice 9 – CoP 9 Investigations
• Contractor Loan Schemes and the Loan Charge
• DOTAS/POTAS Inquiries
• PAYE Tax Investigations 

• Corporation Tax Investigations
• IR35 Disputes
• VAT Investigations and Inspections
• HMRC Unannounced Inspections and Visits
• Settlements with HMRC
• Time to Pay Arrangements
• Statutory Reviews
• Forensic Tax Advice
• Tax Litigation Advice
• Corporate Advisory
• Private Client Advisory