Vat Inspection timing

[Mad Frog]

Hi,

Ok...so I've been looking at winding down a business by the end of the year and was planning on starting the process in the next month or so.

However, just to throw a spanner in the works, HMRC have contacted me for a first time VAT Inspection, the timing of which couldn't be any better as I'm currently up in Shetland for a few months and the closest they can meet is Aberdeen which, to be fair, is slightly closer than London where I normally live.

So, what are my options? I'm guessing I can't/shouldn't start winding down until after this has been done? Or can I?

Costs? Am I expected to cover travel costs to Aberdeen (tempted to and claim everything on expenses for some ironic fun...and I do love (business) ice cream) or is this something I can say is unreasonable, can the inspector come to the Shetland?

Any help appreciated...thanks

 

[Scalloway]

HMRC did have a VAT officer in Shetland but he retired several years ago. I can't see why your business shouldn't pay for you to go to Aberdeen.

 

[Phil Ballard]

Seems like a legitimate business expense to me.

When you say you are looking to wind down your business, is it solvent or insolvent? If it is solvent, I would suggest waiting until the VAT inspection is over before liquidating/striking off, whatever you propose to do.

 

[Mad Frog]

It is solvent, I was thinking I would wait until after the inspection, would it have any effect on things if I started it before?

As for the travel expenses, although this is likely what will happen, it just seems off that I have to spend money and claim expenses to have a VAT inspection on the expenses, especially when it was the HMRC who requested it.

 

[Phil Ballard]

Completely understand your position, but unfortunately you can't say no to a VAT inspection.

Are you looking to do a solvent liquidation of the company, or wind down the affairs yourself and strike off?

There is of course the chance that HMRC will come up with something during the tax inspection that will result in a tax bill being issued. If you liquidate, you will have to sign a statutory declaration that all debts will be paid within 12 months which you would probably be uncomfortable to do until HMRC confirm they haven't found anything. There is nothing stopping you from starting the wind down process now, but be prepared to put funds back into the company to cover any bill that may arrive, if necessary.