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Where Taxpayers and Advisers Meet

VAT Fraud

Posts: 336
Joined: Thu Feb 23, 2012 10:26 am

VAT Fraud

Postby Feedback » Thu Oct 10, 2013 11:08 am

our firm had a visit from HMRC this am in respect of a client and VAT fraud. They've taken the clients records. i'm wondering where our liability as a firm (or even as individuals) will lie in respect of this.

We've only prepared the accounts and VAT in good faith based on the records provided to us. When the client has received pro forma invoices we have exlcuded them and requested proper VAT invoices. When the client has told us VAT invoices have not been paid after six months we've amended returns to repay the VAT or make a voluntary disclosure.

We've only ever had compliance checks previously and not an investigation of this nature so any advice on how to handle this would be welcome.

Posts: 336
Joined: Thu Feb 23, 2012 10:26 am

Re: VAT Fraud

Postby Feedback » Thu Oct 10, 2013 11:14 am

one other point, an ethics question...

i've been working with the client's funder (a VC) regarding some arrears and it is unlikely they will get what they are due. They are still my client and I'm wondering what I should disclose about likelihood of payment if pressed.

Posts: 3
Joined: Sun Oct 13, 2013 6:47 pm

Re: VAT Fraud

Postby Delite » Sun Oct 13, 2013 7:17 pm

There are many variables to this and without an in depth knowledge of your client & their business / your relationship with the client, it is almost impossible to advise. A couple points to check;

A) How are your terms of business worded within your letters of engagement?

B) Do you give sufficient disclaimer in VAT return approvals?

At the end of the day, you can only prepare your work as accurately as the records provided to you and it sounds as though you have taken adequate steps to ensure this occurs. Should HMRC visit your client and discover boxes of cash and sales invoices then that is down to your client.

As far as discussing financials with their funders I would not provide any details without the written consent of your client (I assume that you mean a VCT and your client is unincorporated). Should they be happy for you to do so, I would treat this almost like a mortgage reference and provide details from the financial statements only but include a separate paragraph stating that you are unable to comment on whether or not they are able to make any repayments.

The most important thing with all of this is to not let HMRC bully you or your client. You are well within your rights to argue and although they may try and argue otherwise -they do not have an automatic right to begin investigating other taxes there and then based on their findings from the VAT enquiry.

Let us know how you get on with it!

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