How to get started before VAT audit

What they will be checking
Their investigation will cover the VAT returns for the periods as explained by HMRC before their arrival. They only intend to look at certain areas. However, when they look at these areas they may find that they need to extend their check. If this happens they will let you know.

Basically, HMRC will need to see the VAT records for the last 4 years, Output Tax declaration, Input Tax claims, any non­-standard­rated supplies made, and any specialist VAT schemes or calculations used.

Why they are checking these areas
HMRC will need to ensure the correct VAT liabilities are applied to all supplies made, and to ensure Input Tax has been correctly reclaimed and also to ensure the accuracy of VAT returns submitted and ensure future VAT compliance

What you need to do before their visit
HMRC will send you a list of the records that they will need to see. Please make sure that those documents are available for their visit.

If it will be difficult for you to get some of the records together by the date of the visit, please phone them as soon as possible. They may be able to re-arrange the visit for another date or the visiting officer may arrange to see those records at another time. You will be able to find a specific phone number on their letter or email.

When HMRC arranges a visit, they will talk about any health and safety matters that they would need to know about when visiting the business premises. If there are any changes to that information, please let HMRC know before the visit.

Records held on computer
HMRC is not allowed to operate customers’ or advisers’ computers, so if some of the records are held on a computer, please make sure that there is someone available to access them during their visit.

About the visit
At the start of the visit, they will need to talk to you so that they can understand how the business works and how the records and accounts are kept. HMRC may also want to look around the business premises. They will then check some of the records and may need to speak to the person responsible for them. At the end of the visit, they will discuss any findings with you and answer any questions you have.

The length of the visit
HMRC normally expects to complete their visit within one day. However, if they find that it is going to take longer, they will let you know. HMRC tries to carry out all visits as quickly and efficiently as possible. You can help us do this by making sure that all the records they have asked for are available and that there is someone there to help us understand them.

Completing the check
Once they have completed their checks, they will let you know whether the company needs to do anything about its records. If their check shows that the company has not paid the right amount of tax, they will also let you know. There may be more tax to pay, or there may be something due back to the company. HMRC will also tell you more about this at the time. 

They normally charge interest on any extra tax that needs to be paid but they can also give interest on amounts they owe.
HMRC may charge the company a penalty if there are errors in any of its returns.

What is the Single Compliance Process?
HMRC has introduced a new Single Compliance Process to improve the quality and consistency of our compliance checks. HMRC will be using this new process for this checks.
After HMRC has completed their check, they will ask you to complete an evaluation sheet. 
They would also like your feedback on their check so that they can assess the impact of their new process, and to see if there are any parts of the process that thy can improve or change.
Your feedback is important to them because it is only by listening, that HMRC can improve the quality of services that they provide. HMRC also wants to give customers the opportunity to influence our processes in the future.

If you require further information in relation to this aspect or any issues covered by this aspect, please contact our office on 020 8768 5628.