VAT INSPECTION

Once registered, visits from the VAT man should be routine and no cause for alarm if you are properly prepared for a visit.

The VAT inspector’s job is simply to ensure the correct amount of VAT is accounted for by VAT-registered businesses. Their first visit to you will take place within three years of you registering for VAT, or sooner if your returns result in Customs & Excise repaying you. Follow-up visits are then generally every few years. However, if they find reason for concern, they can descend on you at any time.

Arranging a visit
That said, the VAT inspector should not call on you unannounced. They should first arrange a date. If the time doesn't suit, you can usually reschedule. But, if you keep postponing the visit, the VAT inspector will probably insist that you keep an appointment.

What the VAT inspector wants to see
When they make the appointment, the VAT officer should tell you what records they want to see, and how far back they want to check. Typically these records will include: annual accounts; VAT records and workings; Copy VAT returns; bookkeeping records; bank statements; sales and purchase invoices; delivery notes; goods received forms; proof of export (where applicable); any relevant correspondence.

Be organised
The neater your system, the quicker and more painless the visit. Keep complete and up-to-date records because the VAT inspector needs to be able to track the figures in your VAT returns back to figures in your books and invoices. Keep records accessible and filed in a logical way. For example, file invoices by number or date. Make sure your records are tidy and legible. Check additions on returns. Check figures on your returns match VAT totals in your accounts.

What a VAT inspector can do
The VAT man is legally entitled to inspect records over the last six years even on a routine visit. If he suspects fraud he can investigate records as far back as 20 years. He may also want to inspect your premises including home businesses. Don’t be surprised if he demands to see any documents relating to the supply or purchase of goods and services. He could also ask to remove documents relating to the VAT inspection (photocopies, though, are generally acceptable).

Making mistakes
VAT is a complicated area and you are not expected to know every last detail. If you have done something wrong, the VAT officer will explain what and how to fix it. If you have under-declared your VAT output, or over-claimed your VAT input you would owe Customs & Excise. If you have over-declared your output or under-claimed your input Customs & Excise will repay you.

Notice of assessment
You may get a notice of assessment or repayment after the inspection. There may be penalties or interest charges on any amount owed, especially if you have made a ‘serious misdeclaration’, a very big error, or shown persistent lack of care in recording VAT. Should you disagree with the assessment, speak to the visiting officer or contact your local office and get another officer to look at your case. If you are still unhappy, you can go to an independent VAT tribunal.

Payment deferred
If you can’t pay an assessment or a quarterly return, get in touch with your VAT office immediately. If you submitted and paid all your previous returns on time, they may consider letting you defer payment for a couple of months or allow you to pay in instalments.

Where to get help
Customs & Excise is helpful and will provide you with the information you need to understand the VAT system. They also try to answer all telephone queries and to respond to letters within ten working days.

We can also advise on VAT matters, and can sit in on the inspection if you wish. However, you are the one who will have to answer any questions the VAT inspector may have.

A visit from the VAT inspector is usually routine and nothing to lose sleep over. Remember that the neater your book-keeping and filing system, the more painless the visit will be.

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