What is a VAT investigation?
A VAT investigation is a detailed enquiry into a business suspected of deliberately evading VAT and is conducted by specialist VAT officers employed by HM Revenue & Customs (HMRC), the government department responsible for the collection of taxes.
A VAT investigation can be undertaken into any VAT registered or registrable business and involves officers visiting your premises and examining particular records
Why is my business being investigated?
Your business may be the subject of a VAT investigation for a number of reasons.
Popular triggers include:
1) Trading within a typically high risk business sector, such as alcohol, tobacco or high value MTIC goods.
2) HMRC has examined your customers or suppliers as part of a full supply chain investigation
3) Sudden VAT repayments are being claimed
4)VAT repayments are higher than normal
5) HMRC has received information about your business
6) Your business has failed VAT return credibility checks
7) During a routine VAT visit, a VAT officer identified something in need of further investigation
Has a VAT investigation already begun?
If an investigation is underway, you are likely to be notified at some stage by letter from a VAT officer. This letter will outline the fact that an enquiry has commenced into your VAT affairs.
Alternatively, a Notice of Inspection may be issued, advising of a VAT inspection date. Within this inspection, the VAT officer(s) will review various financial records to aid their investigation.
In conjunction with a Notice of Inspection, you may also receive a Notice to Produce, which means that you have to produce specific documents and records in line with the officer’s requirements.
In the most extreme of cases, VAT officers may turn up for a visit to your business premises unannounced. At all stages, it is wise to seek the professional advice of a VAT specialist.
Will I be interviewed by HMRC?
As part of a VAT investigation, it is highly likely that HMRC will wish to conduct a face to face interview with you. This is especially true of those who are being investigated under the Civil Investigation of Fraud procedures. Tax Agency
When being interviewed, HMRC will invite you to a meeting at their office. You will be provided with an overview of the meeting process in advance and have the opportunity to have an adviser accompany you to this meeting.
It is strongly recommended that you seek professional assistance from a tax adviser at this point (if not sooner) – even if you feel that you have nothing to hide, your answers may come back to haunt you in future, so it is vital to be informed.
Can HMRC take my financial records away?