VAT inspection after first inspection - Urgent

by **ainaedil** on Fri Jul 30, 2010 11:46 am

Hi I have a trading company , Our claimed all input VAT and declared Output VAT as zero rated as per our understanding , We had inspection two years ago. The inspector allowed our treatment of VAT.

After two years now another inspect for VAT turned up and saying our supplies are standard rated.

What shall I do , If it is standard rated do I need pay VAT from start or from now on.

As I had , after first inspection , understanding that our treatment of VAT was correct.

Please reply as soon as possible.

Thank you

by **RAL** on Fri Jul 30, 2010 11:55 am

Well, you need to contact your accountant or contact the vat expert! We do not know the whole history of your affairs. Did the inspector during previous visit put in writing?

by **spidersong** on Fri Jul 30, 2010 11:58 am

It really depends on the circumstances as to when you'll pay from.

Why have HMRC changed their mind, has something changed in the business, something changed in the law, or did they discover some new fact they were unaware of before that changes their understanding of the supply?

If they had the full facts then you may be able to rely on their previous ruling and only acount from the date you were informed they were wrong, to do this you need to have had a clear and unequivocable ruling, made by an officer who was in possesion of the full facts.

So really in order to give proper advice we'd need to know what you do, and what's changed or not changed from HMRCs point of view.

If this areas was fully addressed on a previous visit then you should have a good case, if the officer had the full facts. But if the officer wasn't made aware of some material information then HMRC won't be bound by his findings/actions, so if you're a charity and didn't tell him, or you changed from being a partnership to a limited company after the last visit, then these are all things that can have a direct affect on your liabilities and if this is the case then you'll be stuck paying 4 years worth of VAT to the VAT man.

Is what we're looking at basically 100% of your trading activity? Because if it is then it would be rather unusual for HMRCto make a mistake of this magnitude. Really without more background you won't be able to get proper advice.