VAT Inspection. Standard procedure or should I be concerned?

[Langkawi]

Hello,

I've just had a call from a nice lady with the unusual name of Hector. She has made arrangements to come and visit me in a few weeks for a VAT Inspection.

I agreed as didnt see any real choice. And asked what was the background. She advised me that it was standard practice and as I'd had my Ltd for 5 years it was unusual I had not been visited already as they try to visit each business every year?!

I'm defo not sure about the visit each business every year part.

But in general, is this a standard thing or should I be concerned that this is the precursor to an investigation or some sort.

(At the risk of incurring some cheek from the more dedicated posters on here): Things are in order and I think I'm generally ok with IR35 status, but obviously am not in any hurry to test that in court.

Should I be worried??

[Clare@InTouch]

Not if everything is in order. Make sure you have copies of your returns, spreadsheets to back up the figures, and copies of invoices to hand. If you're FRS she will be checking you've been using the correct rate given the changes in VAT rates, and perhaps that you're on the right category.

Most of the time these can be dealt with via post rather than a visit.

[northernladuk]

You should only be worried if you have something to hide or have been fudging your numbers IMO. I don't know about VAT inspections particularly but they won't come down on you like a ton of bricks if you have made a mistake but can prove it is a mistake and you have being generally diligent about your books.

I would be slightly worried you are mentioning IR35 when you are facing a VAT check. Part of proving due diligince is showing you know what you are doing.. this doesn't.

[northernladuk]

Not if everything is in order. Make sure you have copies of your returns, spreadsheets to back up the figures, and copies of invoices to hand. If you're FRS she will be checking you've been using the correct rate given the changes in VAT rates, and perhaps that you're on the right category.

Most of the time these can be dealt with via post rather than a visit.

Clare, if you have an accountant that prepares this for you could we not just pass the request on to the accountant to deal with for you?

[cojak]

Unless it's a precursor to an IR35 investigation as these things often are.
Speak to your accountant immediately and get him to front it for you, they ought to know what to say and not say in these situations.

[Jeremiah@RHJAccountants]

Clare, if you have an accountant that prepares this for you could we not just pass the request on to the accountant to deal with for you?

If your accountant is your registered agent with HMRC then they can speak to HMRC on your behalf and deal with the investigation or find out what is needed so that you can deal with the matter.

A letter of the investigation should of been sent to the OP accountant if they have one

[kingcook]

I would be slightly worried you are mentioning IR35 when you are facing a VAT check. Part of proving due diligince is showing you know what you are doing.. this doesn't.

I can't blame OP for worrying though. If HMRC came to inspect my VAT records, i'd worry [about possible IR35] inspection too.

Of course, i ensure that i am outside of IR35, but there is always that possibility that you get some inspector who decides to pin IR35 on you.

At which point, you have to go through more worry of proving yourself to be outside, will they take your reasons, if not what the judge will decide on in the long run? (should it get that far)

[malvolio]

Unless it's a precursor to an IR35 investigation as these things often are.
Speak to your accountant immediately and get him to front it for you, they ought to know what to say and not say in these situations.

WSS. And if you're a PCG member, call them now and get a claim form. (And if you're not, it's likely you're about to find out why that was a bad idea. )

General rules - meet at your accountants, not your home, all questions to be asked in writing with time to respond, do not talk contractual terms (in fact, do not talk), make sure you have VAT receipts (or at the very least proof of payment) for all business expenditure. Do not be complacent, nothing Hector does is casual. You may be lucky and they'll be done in an hour or so. Or you may not.

[TestMangler]

A VAT inspection is not really anything to worry about.

I've had two in the 17yrs or so i've had my limited.

They will have told you (and confirmed in writing) what years they want to look at, although, I suspect that as you've only been going five years, it will be all of them.

What they do is randomly pick a quarter out of each of the years they are looking at and will ask to see your 'workings' for that quarter and may ask for example invoices both for payments in and out.

If that is in order, the chances are they will stick with three or four 'quarters'. Depending on what they find, they may dig deeper. This has nothing to do with IR35. this is VAT.

Ensure your paperwork and workings all match prior to their visit, if you find an error, record it and tell them about it if they pick that quarter.

My second one included a couple of years where I had computer shops as well as contracting, so the vat was miles more complex. The max you can have is an invoice and payment per week. It's not rocket science. And don't worry. They're not really that bad.

Prepare properly and you'll be fine.

[Clare@InTouch]

Clare, if you have an accountant that prepares this for you could we not just pass the request on to the accountant to deal with for you?

Absolutely. And we'd then deal with it by post if possible. There's little reason for them to make a trip out to see you if you can supply everything via post, it just wastes their time and yours.