Running a company with VAT number & HMRC and VAT inspections: all VAT registered businesses are responsible for accounting for VAT and making any necessary VAT payments on time. To keep proper VAT accounts, businesses must obtain, issue and retain various documents, including suppliers' invoices and receipts. They do not have to keep their records in a set way, but must ensure that they are complete, accurate and up to date.
HMRC is responsible for the collection of VAT. Its dedicated VAT officers inspect VAT registered businesses to ensure that their records are in order and that the money claimed from or paid to the government are correct.
Notice period: before a VAT inspection, HMRC will usually contact a business to confirm an appointment date and time and provide the names and contact details of its appointed VAT officer(s). It will also inform a business about the types of records that will form the basis of the inspection and the length of time the inspection is likely to take. In some cases, the inspection will take place unannounced.
Location: VAT officers normally carry out VAT inspections at a business’ main premises. This allows them to develop a clear picture of a business' activities, examine a business' records with as little disruption as possible, and answer any VAT-related queries a business owner may have. In some cases, VAT officers may not visit a business premises, but instead will contact a business by phone or in writing.
Structure: when VAT officers visit a business, they will talk to either the business owner or the individual in charge of the business’ accounting duties. They will then examine the business' records, and inspect the premises and any goods contained within it.
Length: VAT inspections vary considerably in length. A VAT inspection may last several hours or several days, depending on the complexity of a business’ accounts.
Frequency: the frequency with which HMRC chooses to send its VAT officers to inspect a business depends on the size and complexity of the business and its past record of meeting VAT requirements. If a business has previously submitted late or inaccurate VAT returns and/or payments, HMRC will schedule frequent inspections.
Outcome: at the end of a VAT inspection, the VAT officers will explain the work they have carried out and the findings they have uncovered. Afterwards, they will write to the business with a summary of the inspection, along with any rulings, agreements and/or recommendations.