HMRC now takes a more targeted approach when selecting businesses for a VAT inspection

Thursday December 2017

HMRC now uses a sophisticated system to gather information and target enquiries.  This uses a range of third party data sources, including banks, insurers, Land Registry etc. as well as the Internet and social media, to select businesses for an inspection.

Inspections could also be prompted by an anomaly in accounting or VAT return figures on a particular submission, typically where output tax decreases or a large input tax claim is made. There may also be a central initiative – for example in 2015 HMRC focused on VAT claims made by businesses operating the flat rate scheme by checking VAT claims on returns over the past four years.

If you incur one-off costs or dips in turnover, ensure you think ahead and document the reasons in case you are asked.

HMRC is also approaching businesses for a dual tax audit, involving VAT and another tax (PAYE/corporation tax). It is required to notify you if this is the case, but in our experience this has not always happened.

t’s always worth checking exactly who is visiting and their contact details – a letter should be sent by HMRC beforehand to confirm matters and exactly what it intends to check.

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