HMRC VAT visits and saving money

It is a normal activity of HM Revenue & Customs (HMRC) VAT Officers to visit your business, to inspect the VAT records and check whether the correct amount of VAT is being paid or reclaimed. They will normally make contact at least 7 days before the visit to arrange it, however they can, and do, also turn up unannounced.

Any business can be visited by HMRC but certain variables will make a VAT visit more likely. These include the submission of late or incorrect VAT Returns or the submission of VAT Returns showing that the business is due a VAT repayment, even if the business is entitled to all the VAT repayments.

In recent years, throughout the UK, VAT visits have resulted in significant yields for HMRC in terms of VAT, interest and penalties. Therefore, it is perhaps not surprising, that HMRC appears to be putting significantly more resources into this area.

At Garbutt + Elliott, our VAT team has strong experience of dealing with HMRC visits.   Over the last few years, we have helped a number of our clients during HMRC visits, saving them significant amounts.

Recently, one of our clients requested us to help them with HMRC VAT visit. Our client had omitted to perform partial exemption calculations for their income. Based on the standard partial exemption calculations, the client would have paid around £52,000 back to HMRC for last 4 years. However, HMRC were including calculations for 2 quarters which were out of 4 year time limit. When we reviewed it, we were able to reduce the liability to around £27,000. Without VAT expert presence, the client would have accepted HMRC’s assessments.

In addition to saving £25,000 for the client, we also tried to mitigate penalties which could be in the region of £10,000. Ideally, to obtain maximum mitigation of penalties, the disclosure of any VAT errors should be made at a time before HMRC arrange a visit.   However, even during this visit, our expertise meant that HMRC agreed with us and suspended the penalties, leading to a client saving of around £35,000

If you have any concerns about a VAT visit that has already been arranged or would like to discuss the disclosure of VAT errors, please contact our VAT Team.