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How to Prepare for VAT Inspections

Every business in the UK, no matter how big or small, has to undergo VAT inspections if they are registered for VAT. The purpose of this inspection is to ensure that the VAT records are up-to-date and that the correct amount of VAT is being reclaimed or paid by these businesses. In other words, checking for VAT compliance is the primary reason for these visits.

The frequency of VAT inspection depends on the size of your business. Also, the submission of VAT returns plays a role in it. VAT inspections are more likely to take place frequently for your business if you have been late in submitting your VAT returns. Usually, VAT inspections are conducted by the HMRC once every 4 – 6 years.

A VAT inspection involves a number of aspects. Here, we are going to discuss these in detail along with how to prepare for an inspection.

Notice for VAT Inspection

HMRC will inform you about a routine VAT inspection over the telephone. This is your first notice for the inspection. The primary objective of this call is to agree upon a date of the inspection. Most companies usually get a notice of 7 days before the inspection. You can request a delay if your business’s VAT records are not in order.

You will also be notified about the VAT-related information that HMRC will be seeking during the inspection, the documents they wold like to see and whether an inspection of the premises is also going to take place during the visit. You might also be informed about the duration of the visit.

That being said, a VAT inspection might also take place without prior appointment.

Essential Documents

Once you get your business’s UK VAT registration done, it is crucial to maintain all records properly and keep them up-to-date. This will enhance the transparency and credibility of your business. Also, you would not have to worry about outdated records when the VAT inspector pays a visit to your business premises. Usually, the following documents are inspected:

  • VAT registration certificate
  • Invoices, both, purchase and sales
  • Cashbooks, accounts, other documents related to sales and purchases
  • Paperwork related to the VAT account
  • Documents supporting VAT recovery claims
  • Statements issued by banks, if any

All documents you present should either be dating back to three years before your last VAT return or from the beginning of the incorporation of your business, whichever comes earlier. Review all documents before the inspection so that you can identify and correct errors, if any.

Things to Keep in Mind During the Inspection

It is important to be completely prepared for your business’s VAT inspection in order to ensure that the process goes as smoothly as possible.

  • Ensure that every staff at your office is aware of the VAT inspection. This way, the work flow will not be disrupted and no scope of unsettling your staff arises.
  • During the visit, the person who handles all VAT-related matter for your company should be present. If you have employed a VAT consultant or an adviser, he should also be in attendance at that time.
  • Full co-operation from your side will be expected. If you are not sure about the answer to a question, it is always wise to refrain from guessing. This is because inspectors are going to form their decisions based on what you say and half-truths will not be helpful in any way.
  • Do not forget to take careful notes of what the VAT inspector says. Your VAT inspector may point out certain details regarding your business’s VAT decisions. Getting these in writing will eliminate any misunderstanding at a later stage.

If you have any concerns regarding VAT, you may discuss that with the inspector.

Further Steps

After the visit, the HMRC will process the information gathered and form judgments based on those. You will be notified of any additional tax or penalties that you may have to pay. If you are overpaying or underpaying VAT, you will be informed about that as well. Apart from this, HMRC may also offer certain suggestions regarding your business’s VAT account and record keeping. Ensure that you address these and make the necessary adjustments as soon as possible.

If your business’s VAT records are maintained accurately, you have nothing to worry about. Taking all necessary precautions to avoid any negligence always helps.

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Written By

Allan Lloyd works for The Company Wizard Ltd. He has adequate experience of handling different aspects of company formation as he has worked closely with several companies in the UK, helping them incorporate and registering them for VAT in the course of last few years. He is a freelance writer and editor. You can check out on his blog for tips on company formation & VAT registration.



  1. Elnaseh

    April 20, 2016 at 3:37 am

    Nice post very useful article thank you very much for providing me with this information.

  2. Mike

    June 23, 2016 at 9:52 am

    As VAT becomes increasingly more complex more and more businesses are incurring penalties, sometimes it can be financially beneficial too take advice. Great post and thanks for sharing , Mike W – VAT Accountant Leeds

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