During the past few weeks, a number of business have received notifications from HMRC, informing them that it would like carry out a “remote” VAT audit.
This latest style of VAT audit seems to be focused on small and medium sized businesses (SME’s) which is consistent with HMRC publicly-stated initiatives to increase revenue yields from this sector.
This remote analysis of data by HMRC is a world away from the “traditional” style HMRC VAT audit visit, and is likely to result in risks and challenges that need to be managed. As a former VAT inspector myself, I have misgivings about this new approach. The majority of the VAT visits that I carried out were completed within one or two days. I was able to ask questions face to face with the relevant people and have sight of any documentation that I needed to see at the time. This remote data collection approach seems to me to be likely to lead to a long drawn out process where the taxpayer presents data which is endlessly analysed by HMRC. There is likely to be a risk that businesses will provide more than is necessary. The data provided needs to be enough to satisfy HMRC but not so detailed that HMRC then spends weeks, if not months, in follow up meetings and discussions before the matter is resolved.
How would you feel if you were to receive a similar notification from HMRC tomorrow? If you have any queries relating to the correct way to manage your VAT affairs, please do not hesitate to contact me, Gill Yates at firstname.lastname@example.org or on 0845 177 5500.