VAT is a significant source of income for the UK government, so HMRC goes to great lengths to ensure businesses comply with their VAT obligations. It undertakes hundreds of thousands of VAT investigations each year to confirm that taxpayers are paying and reclaiming the right amounts of VAT.

 

If you have received notification from HMRC that it plans to carry out a VAT investigation into your affairs, our dedicated HMRC solicitors and barristers are on hand to help. We are recognised specialists in VAT and other HMRC-related legal issues and will support and guide you through the VAT investigation process, ensuring you comply with your legal obligations and checking that HMRC’s officers do not exceed their powers. If the VAT investigation uncovers issues with your VAT accounting, or you are concerned that it might, we will advise you on the steps you can take to address the problem and secure the most lenient penalty.

 

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 triggers VAT Investigations?

VAT inspections tend to be risk-based, but this does not mean you have done anything wrong if HMRC contacts you in connection with one. The risk factors at play may stem from the sector in which you operate as opposed to your own reporting.

Examples of the types of risks that might give rise to a VAT investigation include the following:

  • Your business operates in a sector that HMRC has identified as being high-risk for VAT non-compliance, such as hospitality.
  • You regularly pay your VAT late.
  • You have failed to pay your VAT in the past.
  • Your VAT returns appear inconsistent. For example, if you suddenly begin making VAT claims when you have not done so previously, HMRC may want to take a closer look into your affairs.
  • Your VAT returns appear to be at odds with the norm within your industry.

 

What happens during VAT Investigations?

During a VAT investigation, HMRC officers will usually visit your business premises to inspect your VAT records. HMRC will usually contact you ahead of their visit and give you at least seven days’ notice. However, it is within HMRC’s powers to turn up unannounced if they wish to maintain an element of surprise.

 The primary purpose of a VAT investigation is to check that you are paying and reclaiming the right amount of VAT. How long a VAT investigation lasts depends on the complexity of your business structure and what HMRC officers uncover. If your commercial operations are straightforward and HMRC officers find nothing of concern, they may complete their VAT inspection within one day. If the officers identify issues that they suspect are due to your error or negligence, the VAT investigation may take slightly longer. If HMRC uncovers serious anomalies that appear to indicate tax evasion or fraud, you can expect the investigation to last sometime and potentially lead to HMRC escalating the issue and looking into all of your business’s tax affairs.

Expert representation during a VAT investigation is crucial in ensuring you understand your rights and obligations and facilitating its swift conclusion. Our HMRC solicitors and barristers can advise you in the lead up to the VAT investigation and assist you in getting your affairs in order. We can accompany you to the investigation and make sure the officers act fairly and within their powers. If the investigation identifies problems with your VAT accounting, we will devise a strategy that addresses the issues swiftly and effectively and secures the best outcome.

 

What happens after a VAT Investigation?

The outcome of a VAT investigation depends on HMRC’s findings. If your VAT returns are in order, HMRC will take no further action, and the VAT investigation will be closed. If your returns are found to contain errors, HMRC may give recommendations for how you can improve your record keeping going forward and impose penalties. If HMRC uncovers VAT fraud, the consequences can be severe, including unlimited fines, a prison sentence, and director disqualification orders.

VAT investigations require careful handling, particularly if you suspect your VAT accounting may be incomplete or inaccurate. HMRC’s primary focus is on recovering unpaid tax, but it does not shy away from pursuing a criminal prosecution if it considers it necessary. Often, cooperating with HMRC’s officers and being transparent about any issues can result in them imposing a more lenient penalty. Our HMRC team regularly assists businesses of all sizes in successfully navigating VAT inspections. With our deep understanding of the applicable law, procedures, and HMRC’s policies, you can be confident of receiving the very best legal advice and guidance.

 

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.