An Inspector Calls

For the last decade we have not had a single inspection from HMRC.  In all this time we have been advising clients how they should make sure an inspection from HMRC does not represent a risk to their business.

Most of our clients want to play by the rules.  Of course they want to take advantage of the tax breaks available but they don’t want to do anything illegal.  Occasionally we get questions like:

• Why do we have to…?

• Why can’t we just…?

• No-one will know if we…?

We understand.  Business can be tough and sometimes a tax bill is the last thing we need.  And sometimes it can feel like the rest of the world is ignoring the rules.  

Then in the last five months we have had four VAT inspections.  We started to wonder if the practice was being singled out for scrutiny, but when we asked our tax partners Croner* we were reassured this was a pattern seen across accounting practices.

VAT inspections are all about checking records.  Missing VAT receipts mean Input VAT being struck off the VAT returns.  For the last decade we have been advising clients to keep these records without much evidence they would ever be asked for them.  

We are delighted to say that the two inspections that have concluded have passed without issue.  In other words, HMRC has been happy with the record keeping, the returns and clients have not incurred penalties. 

But this isn’t only about VAT.  The principle applies across the board for tax.  Everything can seem fine until it isn’t.  When HMRC asks a question that can’t be answered satisfactorily, business owners are on the hook.

So we feel vindicated and glad that we have protected our clients with the best advice.

*Croner also provide our tax investigation protection which means clients have not had to pay a penny for our input into these investigations.