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What Causes VAT Inspection?

  • Posted 28th March 2015

What Causes VAT Inspection?

Heard of the term ‘VAT inspection’? If you have, you perhaps know what will happen on these inspections. But, do you know what actually triggers such inspections? Well, there are plenty of reasons for such assessment.

Causes of VAT inspection

• You fail to submit VAT returns on time. • HMRC receives information concerning your business. • There are certain types of businesses which pose as a risk factor to HMRC. They believe such businesses do not deal with their VAT properly. If your business lies under risk sector, be prepared to be visited by HMRC. • Your business shows abnormal trading patterns like the purchase and sales ratio is unusual and sudden drop in the amount of declared tax. • There is a history of default surcharge penalties, late payment or non-payment of VAT in your business. • Unexpected claim for VAT repayments are made and are higher than normal. If you are chosen for VAT inspection, HMRC will write to you or calls you to arrange for a visit at a convenient date and time. They even ask you to inspect in your premises. Before the officer arrives, you need to collect the records in relation to your VAT periods. The records include purchase and sales books, copy sales invoices, purchase invoices, banking statements, cheque books, and payslips and so on. If you are not sure what other records you should have ready, you can ask always HMRC before the visit. Apart from the records, HMRC may ask you some questions. That is why you need to be prepared in advance. In such scenarios, a VAT consultant can be very helpful and tell you exactly how you need to deal with them. At the end of the inspection, if the officer founds any errors, you will be told to improve the VAT record keeping of your business. If there is declaration of overpaid or underpaid VAT, the officer will inform the business of the reason and issue an assessment with a penalty. These inspections are a testament of HMRC for ensuring to increase the efficiency of the collection of VAT and other taxes. So, if you aren't paying your share of Value Added Tax, you can expect a visit from HMRC any time soon. If you do not want any inspections on your way, you can contact our expert consultants today at 075 1807 5357 or info@phoenixtaxaccountancy.co.uk.

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