VAT Investigations

VAT Investigations

If you have any concerns or worries in relation to a vat investigation or an impending Vat Investigation that HMRC has opened or about to open, Salford Chartered Accountants will help you every step of the way. Our aim is always to provide a complete and professional service and to ensure all liabilities are kept to a minimum for you our client. We have over twenty years’ experience of achieving successful conclusions on behalf of our clients. Not only as Chartered Accountants are we qualified to represent you but in addition we have years of experience in dealing with many types of vat investigations, representing a wide range of trades and professions and achieving acknowledged results for our clients.

We will put forward detailed and concise arguments and ensure HMRC follows all relevant legislation in respect of compliance checks as this legislation places restrictions on the power of HMRC as they carry out their checks in to the vat returns submitted. Our strong team of accountants will ensure you have full representation and are not “brow beaten” or intimidated by HMRC compliance officers at any time. We will always be available to listen to any concerns you have and look to resolve and ultimately find a successful conclusion as quickly as possible. We work very professionally to ensure HMRC does not publically “name and shame” any of our clients as can be the case.

A vat investigation can be opened for several reasons. These may be any of the following:

• A refund or several refunds on a vat return submitted. Indeed, one of the questions on the vat application is “are you likely to receive regular vat repayments”. We have successfully represented clients in the past who have provided a service or product to an EU member state and a non-Eu member state. Vat was reclaimed on the purchases however no vat is charged on the output sale. Consequently, a refund is a common practice. HMRC had initial concerns about the refund. We achieved a successful conclusion and outlined agreed future procedures and the investigation concluded much to the satisfaction of our client.

• HMRC may be “acting on Information”. We have had a case where our client believed his ex-partner had made false representations to HMRC. HMRC carried out a full public notice 160 which involves the most serious of cases of dishonesty. This is a very serious investigation. The investigation was closed after a period with our client paying no additional vat. Our client complied in full with all aspects and requests from the compliance officers and no such investigations to date have been opened for this client.

• HMRC often opens an investigation after a mandatory inspection of records having made a “discovery”. HMRC works under the premise of the fact that they are entitled to evoke the principle of continuity. This principle states that if they find one under declaration then they can claim that the under declaration has been ongoing for past years leading to a higher assessment of vat. It is up then to the taxpayer to prove HMRC are incorrect.

• Some investigations are often “targeted” or because of a similar investigation occurring for a different form of taxation such as corporation, income tax which opens a vat investigation. HMRC also has the power to open previous vat quarters if they make a discovery or are of the belief that there is a possibility of an under declaration of vat. HMRC sometimes targets businesses which are cash based as they believe that these such businesses are a risk for vat fraud. We have submitted several appeal documents on behalf of our clients in representing such businesses. HMRC has the power and often does confiscate large amounts of cash and will withhold monies for significant period until the appeal is successful. HMRC will also request a statement of assets of liabilities which details daily personal expenditure.

A vat investigation is a complex and often difficult matter and we would always recommend full professional qualified representation by a Chartered Accountant.

So if you are looking for a fully qualified experienced team of vat experts and accountants to successfully fight your corner and achieve the best possible outcome, please contact Salford Chartered Accountants today. We are happy to review the vat investigation and offer a free consultation without obligation on your part.

IMPORTANT VAT GUIDANCE: Overseas Business Using Online Marketplace to Sell Goods in the UK

Should I register my business for UK VAT?

If you’re an online business selling goods stored in the UK to UK consumers and are based outside of the UK, there’s a high chance that VAT either hasn’t crossed your radar or is being ignored entirely.

You only need to answer one question to know whether or not you can ignore VAT:

Do you have customers in the UK?

If not, carry on as you were. If so, please read the following sections.

VAT registration

Overseas online retailers must pay UK VAT on items you sell which are stored within the UK at the point of sale. You must register for VAT in the UK if you’re an overseas seller making your supplies as a business activity in the UK. The marketplaces you use can be held liable for the online sellers’ VAT.

There is no registration threshold in this situation.

VAT requirements

As an overseas seller

Once you are registered, you must:

• charge VAT on your UK sales of goods
• account for and pay that VAT to HM Revenue and Customs (HMRC)

As an online marketplace

HMRC can hold you jointly and severally liable for the UK VAT an overseas seller owes if they don’t meet their VAT requirements.

Failure to meet VAT requirements

HMRC will identify high risk overseas sellers who aren’t meeting UK VAT requirements. This includes, but isn’t limited to, failing to:

• register for VAT in the UK
• supply accurate VAT returns for sales in the UK
• pay the full liability arising from sales in the UK

Overseas seller liability

If you don’t register, HMRC can register you for VAT. HMRC can also consider the following:

• directing you to appoint a UK-established VAT representative
• requiring provision of a suitable security

These measures are in addition to the normal penalties HMRC can impose.

If you continue failing to meet UK VAT requirements, we can inform the online marketplaces you trade through of this. They may then decide to remove you from their marketplace.

What If I Just Ignore VAT?

If you are an online business based outside of the European Union but selling to UK-based customers, you have three choices when it comes to VAT:

• Keep ignoring it.
• Pull out of doing business in the UK.
• Get your business up to speed and compliant with VAT regulations.

We’d never recommend taking the risk of option one; businesses can be ruined by tax complications. If you have very few UK customers, ceasing business in the UK might be a feasible option, but then you’re missing out on the opportunity to grow your customer base in large markets too.

If your business already has a large UK customer base, or if you are already growing in the UK, then you’re really only left with the option to comply with VAT laws. At Salford Chartered Accountants, we aim to offer hassle-free VAT support to our clients. We can represent you to deal with HMRC; and we will report to HMRC the amount of VAT you’ve paid and file your VAT Return on your behalf which is usually due every 3 months.