VAT Health check – are you prepared for a VAT inspection?

By undertaking a VAT health check we are able to help you identify and resolve mistakes before they become problematic.

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Owen Burn
Published: 01 Aug 2019 Updated: 13 Jun 2022

VAT is a complex, self-assessing tax and it is not uncommon for mistakes to be made. Unfortunately, many businesses fail to identify errors until they are found by a VAT inspector, which can result in a large VAT assessment and higher penalties, because the error is treated as “prompted”.

By undertaking a VAT health check we are able to help you identify and resolve mistakes before they become problematic.

A VAT health check usually starts with a visit to your business premises where we work through a detailed VAT questionnaire. This helps us to identify high risk/high value transactions which commonly trigger VAT errors or other VAT compliance issues. We also sample check source data, invoices, review coding and carry out some high level credibility tests to identify any further anomalies/areas of concern. We can then work with you to quantify any errors discovered and make a voluntary disclosure to HMRC, or give you reassurance that you are meeting your VAT compliance obligations.

Typical benefits of a VAT health check include:

  • identification of opportunities to enhance your VAT position
  • peace of mind that you have applied the correct VAT treatment to high value transactions and common income streams
  • confirmation that input VAT is being recovered correctly and suggesting any opportunities to increase recovery
  • identification of errors in advance of a VAT inspection, potentially mitigating any penalties that may be assessed by HMRC
  • identification of improvements to systems, processes and controls
  • gaining an understanding of recent case law and developments that may be relevant to your business
  • high level credibility testing and sample checks – similar to those undertaken by HMRC VAT inspectors
  • checking that you are complying with or making preparations for MTD for VAT
  • checking if you are using VAT schemes correctly
  • identifying high level Brexit issues and advising on mitigation.

Smith & Williamson’s Bristol office has a specialist VAT team, which includes ex-HMRC VAT Inspectors, who have a wealth of experience advising companies of all sizes across a broad range of sectors.

By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. This briefing does not constitute advice nor a recommendation relating to the acquisition or disposal of investments. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details correct at time of writing.

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This article was previously published on Smith & Williamson prior to the launch of Evelyn Partners.