Vat Fraud Investigation
A letter from HMRC informing a business that they will be coming to make a check of the VAT records of the business is a worrying time. HMRC often expect a level of bookkeeping which is impossible to adhere to without a full time bookkeeper.
Many people are still under the illusion that HMRC are visiting to check the VAT records as some form of audit to make sure that they are keeping the VAT records correctly. It used to be the case that VAT visits were made on this basis but for a number of years, as with all other HMRC tax investigations, a visit to check the VAT records is based on a full and detailed risk based analysis of various different things including:
- A check of the VAT records against the business results filed with HMRC
- A check of the VAT records against information HMRC hold about the amount of money taken by debit or credit card (this information is obtained by
HMRC from the merchant provider)
- A check of the VAT records against information obtained from other check of VAT records for other businesses
Before the VAT check is undertaken HMRC will have done extensive research and it should always be remembered that HMRC are undertaking the VAT check as they believe that there is something wrong.
VAT checks are regularly used to obtain information which HMRC use to prosecute individuals as the errors are transactional in nature and leave a clear evidence trail. If there is something wrong with the VAT affairs of the business then it is imperative that advice and help is sought before the check of the VAT records is undertaken.
In most instances HMRC will give a business notice that they are going to conduct a check of the VAT records and therefore this gives people time to contact a suitable specialist to help manage the process. In these instances, we would postpone the VAT visit and decide how to best disclose any irregularities to minimise any risk of potential prosecution or to ensure that full credit is given for disclosure in civil (none prosecution) cases.
Sometimes HMRC will call unannounced to undertake a check of the VAT records or to take readings from the till. HMRC will produce an official notice explaining that they had a right to do this which has been approved by a Judge. People often panic and just let HMRC do what they want. Although they may have an official document they do not have to be granted access to the premise at that time. At worst, there is a £300 penalty for not complying with the notice (plus the potential of daily penalties) but HMRC’s own instructions make it clear that they can be refused entry, and if it is politely explained that the time is not convenient and that arrangements will be made for HMRC to visit to check the VAT records at a later date, then they should leave. If HMRC fail to leave when requested then they are guilty of aggravated trespass and the police should remove them from the premises if required.
Thus even in unannounced visits there is the opportunity to buy some time and seek advice on how best to handle matters.
Gilbert Tax understands that people sometimes make mistakes in their dealings with HMRC and that HMRC make mistakes in dealing with taxpayers. Many people do not know how to deal with HMRC or who to turn to for help resolve the tax dispute.
Gilbert Tax is a firm of tax advisors who specialise in resolving people's problems with HMRC. We have extensive expertise in dealing with all forms of tax investigations and tax disputes as well as with taking matters to the Tax Tribunal where agreement cannot be reached.
Gilbert Tax deal both directly with the individual who is under enquiry and also work with many firms of accountants supporting them in dealing with HMRC disputes and advising them on how to handle HRMC to get the best result.
The fact is that proper management of HMRC is the best way of reducing the tax, interest and penalty as well as the time taken in resolving any tax dispute.
Gilbert Tax are none judgemental and rigorously defend your position within the scope and parameter of the law. We take control and manage the process to minimise the interruptions that any form of tax investigation causes to an individual's life and business.