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VAT inspection - Do I need to soil my pants?

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CKG

I've just had the dreaded tap on the shoulder for from the VAT man - He's coming to get me next month...gulp

What's the deal here.

Will I be strung up bollock naked in a stress position SAS style and interrogated untill I tell him about the king size Twix I claimed the VAT back on by mistake a year ago?

I could really do without this right now!

Any advice much appreciated!
 
Hi there
Speak to your accountant and ask him/her to do a pre inspection review to highlight any potential problem areas. I'm sure the VAT man will find something wrong - they almost always do.

Do you have any type of insurance to cover this type of thing? FSB membership or similar?

Good luck:)
 
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I've been inspected several times. Each time they find something small, ask you to pay it, justify their visit to themselves and the robots they answer to, and go away.
Pay them; they are usually right. Be nice to them, they like that, (although are not allowed to accept lunch), and unless you have been naughty it'll be fine. I really wouldn't worry too much.
If your accountant needs to do a pre inspection review to check your records are kosher I'd suggest changing your accountant, as they should be on top of this anyway. At most just inform them of the coming visit.
 
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We had our first inspection a few months ago...it took about 4 hours, and they actually ended up OWING us money!!

Pilfo
 
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if you have being diligent in managing the paperwork, you will not have an issue. If there is an awful lot of paperword, involving imports, contracts etc, then having you accountant look over things is a good idea.

If your accountant does it all for you anyway, all should be in order.

All they are after is a paper trail and to make sure your process is right and you are not claiming VAT back incorrectly (on those executive lunches etc).
 
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As long as you have all the necessary information, they are nothing to worry about. Who does your bookkeeping? Do you have all the records to hand?

As Dawg says, they will try and find something. Perhaps I've been lucky, they've only ever found a tiny refund due to me.
 
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We had one last year. No problems at all. Get in some tea and biscuits. As long as you are recording everything correctly and can pull up any info they need for your accounts package/filing system then you'll be fine.

Pointless side note: The HMRC inspector that came to ours left her coat behind. We did phone her office to tell them but she never did come back for it.
 
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Don't panic, Mr Mainwairing! :D

As long as your records are in order and easily referenced, you are onto a winner. Be as helpful as you can (though some schools of thought say you can be too nice and they wil think you're sucking up to them as you have something to hide :rolleyes:- you can't win! Just be nice :))

If they do come back with you owing some VAT, double check their workings. This happened to one of my clients once - the VAT inspector noticed they had posted a purchase invoice twice, and reclaimed VAT twice. They failed to check that I'd noticed this already and posted a credit note, cancelling the duplication. Once I pointed this out, they admitted their error and my client had nil to pay.
 
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We had one a few years ago, and i remember feeling exactly the same dread, however it can be fairly routine and they were civil and pleasant to deal with. I think the key is to be well organised, or at least appear to be well organised. Have all paperwork to hand, as whenever you say things like "oh i lost that" or "never got a copy of that" they will think the worst and read into it. Even if it requires calling someone, or having a think for a minute, answer whatever they ask clearly and with reference to the necessary paperwork. They like to have an answer for each point they raise so that they can report back that everything is concluded and there are no loose ends (remember they are employees with bosses and want to get jobs finished as soon as)

Finally dont deny or make something up just for simplicity's sake, since this can spiral into a bigger investigation. As the previous reply said - they like to make some financial gain from their trip, so it is worth admitting to a few pounds of inadmissable items rather than denying everything and provoking a full scale search.

Of course, if you wholeheartedly believe everything you have done is correct then by all means stand up for yourself, but dont go over the top in protesting if deep down you think they are right.

hope some of that helps.
 
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Thanks for your replies. At least i'm not going to get cuffed and pistol whipped then

Though I have just realised to my immense relief that they are inspecting a company that has only been VAT regd for about 12 months - With only a small turnover of about £100k or so.

I had nightmares of them going years back into other businesses with separate VAT numbers and digging around in some very complicated building contracts and VAT exemptions we were involved in.

The good news is my paperwork is together - just not in any specific order.....Ahh well best get my arse into gear and do some cooking...
 
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Eagle said:
^ Then they take away your computers for audit.

;) :D
Click to expand...

Not in my case, she just huffed & puffed, removing a PC or its data for an audit requires the involvement of senior/advanced HMRC staff and unless there is reason to suspect substantial advantage, to HMRC, its not cost effective.
Going back many years, vat inspections were undertaken by reasonably experienced & senior people, they are now undertaken by inexperienced juniors, unless they have reason to suspect you of 'fraud', who often have to return to the office & check the rules & regs before they can come to a conclusion.
:D
 
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CertaxBexley said:
Of course if you run a paperless office that realy throws them, at least it did with me.
Click to expand...


No problems whatsoever for us. Just copied the relevant data (VAT reports, statements, invoices, all in pdf format) on to a CD and handed it over. She was quite comfortable using it.

Same as accountants I suppose - some of them think that it's great, the others go into a flat spin! :)
 
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it'd make her life a lot easier if eveyone used KashFlow. Wouldn't let me quote her on it though!
Click to expand...

Good job I use Kashflow then! I'm just not very good at remembering to put things on it.

God I hate admin...:-(
 
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CKG said:
Good job I use Kashflow then! I'm just not very good at remembering to put things on it.

God I hate admin...:-(
Click to expand...

Drop me an email with the date of your inspection. I'll put it in my diary and try to make sure I'm around.

If any queries relating to the software come up in your inspection, feel free to just call me rather than use the support email or help system.

(I'd like to see Sage's MD offer the same!)
 
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DuaneJackson said:
Drop me an email with the date of your inspection. I'll put it in my diary and try to make sure I'm around.

If any queries relating to the software come up in your inspection, feel free to just call me rather than use the support email or help system.

(I'd like to see Sage's MD offer the same!)
Click to expand...

Aww, he's good isn't he :)

Nice one Duane :D
 
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Eagle said:
^ Then they take away your computers for audit.

;) :D
Click to expand...

:)

We had an inspection few years back after our accountants claimed quite a big refund from VAT man based on something that had been incorrectly accounted for over the past 2-3 years.

I was a bit worried as it was the first (and so far only) VAT inspection we'd had.

We opened up Sage on a PC for him but he told us he wasn't allowed to touch our computers (not sure if he just didn't know how to use it, or whether the vat office are frightened about getting sued).

Anyway, he requested several different invoices and bills, we provided everything he needed promptly, he had a quick chat to our accountants on the phone and went on his way - lasted about 3 hrs in total.

He was actually quite a nice chap. I think they can get a feel pretty quickly if you are open or if you are trying to hide things. We could provide every document he wanted to see, and when he asked about the refund we'd claimed, I explained I didn't have a clue what it was about, our accountants got me to sign the form, and I got them on the line so he could chat to them. As long as you haven't been doing anything dishonest, and your accountants are organised it shouldn't be a problem
 
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Having been on both sides of the fence, as a VAT man (13 yrs) and a VAT consultant (20 yrs), I'll echo [but not repeat] most of the comments thus far. The majority of VAT Officers are pleasant, friendly and reasonably knowledgeable. If you've done everything to the best of your ability you have nothing to fear. If you've missed something out, you'll be asked to correct it in either direction; but don't, as someone suggested, think that the VAT man is probably right. If that were so, I would have been out of a job a long time ago. One trait of the average VATman is that he/she can talk the hind legs off a donkey, so if you can find their pet subject, he/she will spend more time talking about that, than checking your figures. Try football, cricket, tennis, holidays etc., and get the chocolate biscuits out.

Anyway, good luck and keep everyone informed as to how it goes.

Regards
Dave
 
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.....so if you can find their pet subject, he/she will spend more time talking about that, than checking your figures. Try football, cricket, tennis, holidays etc., and get the chocolate biscuits out.


Not sure that is the best idea - had a similar situation, got to about 430 and she said it was the end of her working day, but she would have to book back in again to finish off next week. ended up having to schedule another half a day which could have easily been done that afternoon.

i know where you are coming from though!
 
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VATmen (and ladies) sound very much like regular auditors. At work we get audited by companies like Boeing and Rolls Royce, or bodies like the civil aviation authority and federal aviation administration. Always lots of auditing going on in the aviation industry, and from some very highly trained people. We do our own audits as well.
All auditors are looking for something unusual, something that doesn't fit, and once found we'll pursue it until we've found out why it doesn't fit.
Golden rules for being audited:

1/ don't start blabbing away and volunteering piles of information that haven't been asked for - we can't process it all and you're likely to start identifying problems we may have missed otherwise - keep to answering the questions we have.
2/ yes, the quality of tea/biscuits does count
3/ make sure you have everything to hand - nothing more infuriating than auditing someone who has to wander off and make phone calls, and who takes a long time to get the information.
4/ pet subjects: it depends on the auditor. A low skilled auditor can be sidetracked with something like this, but a better trained auditor will either stop you from doing this or let you do it and come back the next day if everything hasn't been covered (there aren't that many of them, and they're usually good enough to cover what they need quickly)
5/ The biggest one: don't argue with an auditor. I've seen some findings that were fair or even slightly ambiguous turn into arguments that have put a bad feeling over the rest of the audit. If you have a concern, raise it at the time but leave it at that and then get evidence to back up your side of things and present them after the audit (we offload some things that were put on us at the time of the audit virtually every time, because we didn't have all the info. at the time of the audit)
 
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Fair comment/good advice from the last two contributors, but a couple of things to remember:

1) For the most part, a VAT inspector doing a routine visit will only have an allocated amount of time to complete the task.
2) VAT inspectors are not auditors, in fact nowhere close, as they only have very basic accountancy training.

Their knowledge of VAT has improved significantly over the years, but it is sometimes sadly lacking.
 
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