VAT Inspection

How to prepare the records for VAT visit

Accountants for Locums, Doctors and Pharmacist

In UK all the vat registered business expects to a VAT compliance unit’s visit in every four years. All the business in UK must keep their records for seven years. Copies of VAT return with all the supporting schedules must be kept together with the copies of sales and purchase invoices. Brayan & Spencer Associates help clients in records keeping and in the preparation for VAT Inspector’s visit.

Brayan & Spencer Associates help clients before, during and the after VAT compliance visit. We check with the client the status of the books and records and we liaise with the HMRC and fix the time date and place for the meeting.

Typical letter from the HMRC visit contains the following information

Check of VAT records -

  • Visiting officer:        Mr S Smith
  • Date of visit:        3 June 2076
  • Time of visit:        11:30am
  • Place of visit:        As shown above
  • Our ref:        ISBC/S0111/KTT/100000001
  • VAT number:        100 0000 01

To find out what you can expect from HMRC and what HMRC expect from you go to www.gov.uk/hmrc/your-charter and have a look at ‘Your Charter’

If you need to change the date, time or place of the visit, please phone HMRC as soon as possible on the number at the top of the letter.

The periods HMRC will be checking

HMRC check may cover all the VAT returns for the period since the company registered for

What you need to do before the visit

The visiting officer will need to see the records as requested in the letter. Business mush make sure that

these are available for the visit: eg

Records required

  • Annual accounts and bank statements
  • The VAT account and any related working papers
  • Books of account:
    • sales and purchase daybooks
    • cash books
    • petty cash books and ledgers
    • sales and purchase invoices

  • Supporting documents such as contracts and correspondence
  • Your VAT registration certificate if this is your first VAT visit

The certificate of incorporation for limited companies if this is your first VAT visit.

If it is difficult for you to get some of the records together by the date of the visit, please phone HMRC as soon as possible. HMRC may be able to re-arrange the visit for another date, or the officer who visits you may arrange to see those records at another time. Brayan & Spencer Associates could help you in this matter.

If there are any health and safety matters that the visiting officer needs to know about when visiting the business premises, please phone HMRC before the visit on the above number.

If any of the records are held on a computer, please make sure that there is someone available to access them throughout the visit. That person should have full knowledge of your system and be able to provide or generate reports containing information that inspector may need to examine.

About the visit

At the start of the visit, inspector will need to talk to you so that he understand how the business works and how the records and accounts are kept. Inspector may also want to look around the business premises. inspector will then check some of the VAT records and may need to speak to the person responsible for them, if that is not you. At the end of the visit, inspector will discuss any findings with you and answer any questions you may have. Brayan & Spencer Associates could be send one off their VAT expert to help you during the VAT inspection.

The length of the visit

We expect to complete the visit within 1 day. You can help inspector do this by making sure that all the records we have asked for are available and that there is someone there to help to understand them. If inspectors find that they need longer than 1 day, they will tell you.

More information

Factsheets CC/FS1a General information about compliance checks and CC/FS3, "Visits - by agreement or with advance notice". Please take time to read them, as they give you important information about this type of checks.

If you have any questions about the visit once you have read them, please phone Brayan & Spencer Associates on the number 0207183 5956.

If you have any general questions about VAT, please phone our VAT helpline on 03002003700 or www.gov.uk/topic/business-tax/vat

If there is anything about your health or personal circumstances that may make it difficult for you to deal with this check, please tell Brayan & Spencer Associates so that the we can help you in the most appropriate way.

General information about compliance checks

HMRC factsheet contains important information. Please take the time to read it and keep it safe - you may need to refer to it during the check. For the full list of factsheets in our compliance checks series, go to www.gov.uk and search "factsheets" or call Brayan & Spencer Associates for ant assistance you may need.

What is a compliance check

HMRC carry out checks into returns or other documents to make sure that the customers pay the right amount of tax at the right time and receive the right allowances and tax reliefs. HMRC call these checks "compliance checks".

HMRC carry out some checks over the phone. If HMRC phone you, you can ask HMRC to write to you instead. Some types of check can only be done within a certain time limit. The officer dealing with the check can explain these time limits to you. If HMRC find something wrong they may extend our check, for example, they may check earlier periods.

What happens during a compliance check

HMRC will always tell you what they are checking. If HMRC find that they need to extend the scope of our check, they will tell you.

If you have any worries you can appointed Brayan & Spencer Associates as your representative, you can ask us to deal directly with them during HMRC check. Information about how you can authorise a representative is on page 4 of this factsheet.

We will ask you to give us any information or documents that we may need during the check. In some cases, we will ask to visit your business premises, if you have any.

If you are not sure why HMRC are asking for something, please speak to Brayan & Spencer Associates and we will talk to the officer dealing with the check and they will explain why we need it. If you cannot do what HMRC is asking please call Brayan & Spencer Associates and if you think that something HMRC have asked for is unreasonable or not relevant to the check, please tell us and our VAT specialist will call the officer dealing with the check. They will consider your reasons carefully and if they still think they need it, they will tell you why.

What if you need more time

If you need more time to arrange the visit and If HMRC think it is reasonable to do so, HMRC will allow you more time. You can also ask us to postpone the check if you have a good reason, for example, if you are seriously ill or someone close to you has died and Brayan & Spencer Associates will make sure that you get an extension.

The benefits of helping HMRC during the check

Helping HMRC with our check can have benefits for you. It will allow HMRC to complete the check as quickly as possible and reduce any inconvenience that it may cause you.

They may not find anything wrong. But if there is something wrong, helping HMRC with our check will also reduce the amount of any penalty we may charge.

Compliance checks series - CC/FS3

Visits - by agreement or with advance notice with HMRC

As part of a compliance check, HMRC may ask to visit your business premises if you have any. This is so that HMRC can look at your records or business assets and find out more about how your business operates.

HMRC normally carry out visits with your agreement. HMRC will contact you by phone or letter to arrange a date and time for the visit. HMRC will usually give you at least 7 days notice.

What if HMRC have given you a notice of inspection and you fail to comply with it

If HMRC give you a notice of inspection and you do not allow us to carry out the inspection, HMRC may ask an independent tribunal to approve an inspection. If they approve an inspection and you still do not allow us to carry it out, HMRC will charge you a £300 penalty. You might also have to pay further penalties of up to £60 a day until you allow HMRC to carry out the inspection.

If you have a reasonable excuse for not allowing HMRC to carry out an inspection that has been approved by the tribunal, we will not charge you a penalty.

The Human Rights Act and your privacy

Article 8 of the Human Rights Act gives you the right to respect for your private and family life, your home and your correspondence. We have the right to carry out an inspection in a reasonable and proportionate way even when it conflicts with your rights. If you think our inspection is not reasonable and proportionate, you could ask Brayan & Spencer Associates to help you.

What happens if you give HMRC incorrect information that you know to be incorrect . What happens if you have deliberately done something wrong

If you give HMRC information that you know to be untrue, whether verbally or in a document, or dishonestly misrepresent your liability to tax or claim payments to which you are not entitled HMRC may carry out a criminal investigation with a view to prosecution.

Managing Serious Defaulters

If you have deliberately got your tax affairs wrong, HMRC may need to monitor your tax affairs more closely. HMRC have an enhanced monitoring programme called Managing Serious Defaulters. You can find more information about this in factsheet CC/FS14, 'Managing Serious Defaulters'. Go to www.gov.uk and search "CC/FS14".

Publishing details of deliberate defaulters

In certain circumstances HMRC may publish your details if you have deliberately got your tax affairs wrong. HMRC cannot publish your details if you qualify for the maximum penalty reduction. You can find more information in factsheet CC/FS13, 'Publishing details of deliberate defaulters'. Go to www.gov.uk and search "CC/FS13".

What happens at the end of a check

HMRC will finish our check by either sending you one or more ‘decision notices’ or by agreeing a contract settlement with you.

A decision notice can be:

  • an assessment or amendment to an assessment
  • a penalty notice if a penalty is due
  • a letter setting out what the final position is

A contract settlement is a legally binding agreement, where you offer to pay everything that is due as a result of our check, and HMRC agree not to use our formal powers to recover that amount. You can only pay through a contract settlement if both you and HMRC agree to this, and to the terms of the contract.

HMRC cannot enter into a contract settlement for any VAT or VAT penalties that are due.

What if you cannot pay what you owe

If you think you may have problems paying, please call Brayan & Spencer Associates and we will talk to the officer dealing with the check.

What to do if you disagree

If there is something that you do not agree with, you should tell us and we will discuss with HMRC

If HMRC make a decision that you can appeal against, HMRC will write to you to explain the decision and tell you what to do if you disagree. You will usually have 3 options. Within 30 days you can:

  • send new information to the officer you have been dealing with and ask them to take it into account
  • have your case reviewed by an HMRC officer who has not been involved in the matter
  • arrange for your appeal to be heard by an independent tribunal, who will decide the matter

Whichever you choose, you may also be able to ask for an HMRC specialist officer to act as a neutral facilitator to help resolve the dispute. This process is known as ‘Alternative Dispute Resolution' (ADR).

ADR is only available for disputes relating to some of the taxes and other areas that we administer.

The officer dealing with your check will tell you if ADR is available for the matter that you are disputing.

Go to www.gov.uk and search "HMRC1" and "CC/FS21" to find more information about:

  • appeals and reviews in factsheet HMRC1, "HM Revenue & Customs decisions - what to do if you disagree"
  • ADR in factsheet CC/FS21, "Alternative Dispute Resolution"

Your principal rights and obligations

You have:

  • the right to be represented - you can appoint anyone to act on your behalf, including professional advisers as Brayan & Spencer Associates, friends or relatives

Your rights when HMRC are considering penalties

If there is something wrong and HMRC are considering penalties, we will help you. The European Convention on Human Rights gives you certain rights when HMRC are considering penalties. You can find full details about these rights in factsheet CC/FS9, 'The Human Rights Act and penalties'. Go to www.gov.uk and search ‘CC/FS9’.

Authorising a representative

You can authorise someone to deal with us on your behalf . Brayan & Spencer Associates is registered agent with HMRC and can deal with HMRC just for a compliance check, or more permanently for your day- to-day tax affairs. Brayan & Spencer Associates will be able to give you a form to complete 64-8. If you want to authorise someone other than a professional tax adviser, you will need to write to tell HMRC, who you want to authorise and what you want them to deal with for you.

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