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Where Taxpayers and Advisers Meet

VAT audits

xanadan
Posts:5
Joined:Mon Jul 04, 2011 3:15 pm
VAT audits

Postby xanadan » Thu Dec 17, 2020 4:51 pm

Hi all,

A friend is getting their 3rd VAT audit in 5 years, they are a start-up and are still unfortunately in a reclaim position so c'est la vie.

The current auditor is being quite awkward however and asking to go back over the periods already audited previously - is this outside the bounds of his authority somewhat or are they encouraged to do this? Its just its a consumer business and times are tough and they are desperately trying to save the Company and dealing with endless old VAT questions (that have already been audited) doesn't help...

I guess there is nothing to be done but just thought I would ask!

Thanks,
Mark

robbob
Posts:3228
Joined:Wed Aug 06, 2008 4:01 pm

Re: VAT audits

Postby robbob » Thu Dec 17, 2020 6:33 pm

I am sure someone will give you full chapter and verse but i am not immediately aware of any protection in that regard other than normal time limits that would have applied anyway had there been no earlier visits.

Main thing is to at least get vat inspector to confirm that they have access to and have checked all the ealier file notes before they start wasting your friends time revisting areas already covered previously - bit of a long shot chance but it could embarrass someone into backtracking slightly if they are being lazy or unorganised and wasting time duplicating questions and requests for info. It sounds like things are past that stage already though.

I do wander though if your friend is the issue here - as long as a business keeps adequate records and is not making errors a vat visit is unlikely to be a headache - anyone who has a had a vat visit should really be looking for feedback to proactively make sure the records are up to the necesaary standards that a future visit should be relatively painless exercise.

Over the years i have rarely had an issue with vat officers being over zealous - unfortunately though there are probably over zealous officers out there and it may be that they see unrepresented business owners as a somewhat easier target perhaps to be heavy handed with.

Your friend should not be afraid to either challenge the vat officer or get appopriate assistance if they are struggling - this would particulalry be the case if the vat officer starts inferring stuff may exist that doesnt - thats the kind of case when they need slapping down if they your friennd has noit doen anything wrong . I would say if your friend has had it pointed out that outputs have been understated or inputs overclaimed i would expect a vat officer to do the right thing and go far as back as they can if its a fair cop.

Your friend is somewhat unfortunate that it is well know that hmrc do pay much more attention to businesses with more inputs that outputs and also businesses with high level of zero rated / expempt sales - i suspect hmrc do have more success raising assessments with this business type so i doubt that is ever going to change anytime soon.

Apologies for the somewhat blunt tone of the response - but really the fisrt principle here is that your friend really should have the answers to all the questions - unless the vat officer is resorting to "estimating things" that may not exist.

xanadan
Posts:5
Joined:Mon Jul 04, 2011 3:15 pm

Re: VAT audits

Postby xanadan » Sat Dec 19, 2020 3:11 pm

Thanks very much for your help.

I think my friend changed acccounting systems maybe 2-3 years ago and hence has difficulty going back to that time - although they probably have all the info printed in a box....somewhere!

So not perfect records and they are annoyed as they feel they are trying to juggle lots of other things too - had some big client wins, going through the final stages of fundraising and this just seems a distraction that is sapping their energy.

Kind regards,
Mark

jvenegas16
Posts:114
Joined:Wed Aug 06, 2008 3:49 pm

Re: VAT audits

Postby jvenegas16 » Wed Mar 24, 2021 10:21 pm

Your friend can oppose to that, as the period has previously reviewed and the decision cannot be overturned. I make that clear to any VAT officer whenever they look into any of my clients' VAT period. It is always either for the last period or since the last review. Alternative, a challenge (appeal) through the Tribunal (it is worth mentioning as a course of action).

les35
Posts:635
Joined:Wed Aug 06, 2008 3:09 pm

Re: VAT audits

Postby les35 » Fri Mar 26, 2021 1:32 pm

As a matter of law, HMRC can review a VAT Return which they have previously reviewed and may come to a different decision on its accuracy. I agree it is not good practice and you may have ground for complaint or possibly Judicial Review if their previous review included an explicit ruling.

davebrownvat
Posts:60
Joined:Mon Jul 20, 2009 4:37 pm

Re: VAT audits

Postby davebrownvat » Wed Mar 31, 2021 12:07 pm

To add to what Les said, another time when HMRC are allowed to go back further than the last review (and or raise an assessment) is where "new information comes to light". A favourite one is when later annual accounts are available.


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