After income tax and national insurance contributions, VAT is the Government’s biggest source of revenue. Given its significance to the economy, it is perhaps unsurprising that HMRC views recovering unpaid VAT as a top priority and undertakes countless HMRC VAT investigations each year to check that businesses are paying the right amount of VAT.

If you have been selected for an HMRC VAT investigation, our team of leading HMRC solicitors and barristers are ideally placed to help. With a thorough knowledge of the law and a detailed understanding of HMRC’s policies, we offer concise, targeted advice to facilitate a swift and favourable resolution of the HMRC VAT investigation with minimum disruption to your commercial operations.

 

For a confidential free discussion, call us today on 01908 414990,  alternatively email us at Hello@altion-law.co.uk or complete our Free Enquiry Form and we will call you back.

 

What is VAT?

VAT is a consumption tax added to the products and services of VAT-registered businesses. Any business can register for VAT if they choose, but businesses must register for VAT if their taxable turnover exceeds £90,000.

VAT registered businesses have several legal obligations, including:

  • Charging VAT at the correct rate.
  • Keeping clear records of the VAT it pays on the goods or services it purchases.
  • Accounting for the VAT on goods it imports into the UK.
  • Sending VAT reports to HMRC detailing how much VAT it has charged its customers and the amount of VAT it paid to other businesses. Businesses usually need to send a VAT return every three months.
  • Paying the VAT it owes to HMRC. This is calculated by working out the difference between the VAT it has paid to other businesses and the VAT it has charged on its own products or services. If the business has received more VAT than it has paid, it must pay HMRC the difference. If the business has paid more VAT than it has received, HMRC will usually make good the shortfall.

 

What is an HMRC VAT Investigation?

The purpose of an HMRC VAT investigation is to check that you are paying VAT correctly. It usually involves HMRC reviewing your VAT records and checking that everything is in order. If it is satisfied that you are paying the correct amount of VAT, the HMRC VAT investigation will end.

If the HMRC VAT investigation uncovers anomalies in your VAT records, HMRC officers may suggest how you can improve your affairs going forward. It will also consider charging a penalty. Whether it does so, and the amount of any penalty, will depend largely on the reasons for the errors and whether they were mistakes or deliberate.

If the HMRC VAT investigation uncovers serious fraud, HMRC may deploy its criminal powers. If you believe there is a risk of such action in your case, expert advice is essential since you may face serious penalties, including a fine and a period of imprisonment.

 

Why have you been selected for an HMRC VAT Investigation?

 HMRC usually selects businesses for an HMRC VAT investigation based on risk. However, this does not mean that you have acted improperly. There are a number of reasons why HMRC may have chosen you, many of which have nothing to do with what you have or have not done.

Examples of some of the more common reasons for HMRC VAT investigations include:

  • The business operates in a sector that HMRC believes poses a high risk of VAT discrepancies, such as hospitality or construction.
  • The business consistently files its VAT returns late.
  • The business has a history of not filing VAT returns.
  • The business’s recent VAT returns appear at odds with its previous reporting.
  • The business’s VAT returns do not accord with industry norms.

 

What should you do if you are selected for an HMRC VAT Investigation?

You should never ignore a letter alerting you to an HMRC VAT investigation. If you are unsure how to proceed, our specialist HMRC solicitors and barristers are on hand to guide you through the process and ensure the most favourable outcome possible. We are not here to judge you but to assist you in any way we can.

Cooperating with HMRC is crucial, and your behaviour before and throughout the HMRC VAT investigation can greatly influence its outcome. By alerting HMRC to potential anomalies and supplying the correct documentation in a timely fashion, you can reduce the risk of HMRC imposing significant penalties in the event it uncovers discrepancies in your VAT records.

With extensive experience in assisting clients of all types with HMRC-related issues, we have developed an outstanding reputation in this niche area. We are expert negotiators with an excellent track record of securing favourable settlements on behalf of our clients.

 

For a confidential free discussion, call us today on 01908 414990,  alternatively email us at Hello@altion-law.co.uk or complete our Free Enquiry Form and we will call you back.