If you are carrying out a catering business in the UK, you will have to undergo the inspection of VAT. You have to be registered for VAT and it does not matter whether your business is a small business or a big scaled one. VAT inspection tips will be very helpful for every business owner to go through the process smoothly. The main aim of setting up a VAT inspection is to keep a track of the information about your business is updated and the amount of VAT that is reclaimed is accurate.
The primary reason for the inspection visit is also to keep a closer check on VAT compliance. How frequent you can undergo VAT inspection may vary and it depends on whether you own a small or a big business. In the case your business is listed for late submissions of tax returns, you will have VAT inspections. The usual practice of HMRC is to practice within the time frame of four to six years. In this guide, we will develop an understanding of how VAT inspection is notified, what the required documents in the process, and what can be the important things to consider during the process.
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Will I be Notified of the VAT Inspection?
The process of VAT inspection is normally notified by the HMRC over a phone call or other communication medium to the owner of the business. During the phone call notifying you about the inspection helps HMRC to get an agreed date on which they can begin the process of inspection. There is normally a gap of days between the intimation of the inspection and the day actually begins. In the case, you do not find yourself ready enough and your records are not in order, you can request a delay in the inspection.
The documents that are required will be exposed during the process of the inspection. You will be informed about the requirements they will be inspecting and there the process involved an inspection of the premises or not. You will get information about how long will it take to end the process of inspection. Sometimes the VAT inspection also occurs without any appointments.
What are the Essential Documents Required?
When your business is VAT registered in the UK, it is important to realise that you can undergo the VAT inspection at any moment. This means you should focus on maintaining your records vigilantly and keep all the information updated. This will allow the involvement of the factors like the credibility of the business as well as transparency. This will allow you to be confident even when an HMRC inspector comes for an unannounced visit to your business premises. This is because all your information and documentation are updated. The required documents during a VAT inspection might include the following:
- Provide if there are any statements that your bank has issued.
- Documents that are related to the VAT recovery claims.
- All the documentation of the VAT account.
- Purchase invoices and sales invoices.
- The certificate of VAT registration.
- Accounts and cashbooks or if there is other documentation about the sales and purchase of the business services.
Moreover, it is imperative to recheck all the documents before the process of inspection begins. This will allow you to identify your mistakes and correct them before the inspection. This will keep you protected from any unfavourable circumstances.
Things to Consider During the Inspection – VAT Inspection Tips
There are a few VAT inspection tips to be fully prepared for a smooth inspection process. Some of the important aspects in this scenario are discussed below for you.
- When you are in the process of a VAT inspection, make sure to take important notes about the findings of the inspector. The certain findings that need improvement according to the inspector will help to grow your business in the future.
- You should be following the cooperative behaviour approach. In case of being unsure about how to answer a question, avoid giving vague answers. This will make the inspector form a wrong image about your business and half-truths are dangerous for this process.
- In the case you have hired a VAT specialist to handle your VAT matters, he should be part of the inspection process by being present there. This will help you to provide all the required details that the inspector will demand.
- Make sure to inform all of your staff members about the inspection process so that no unsettled matters are going on during the phase of inspection.
Once the process of the VAT inspection is completed, the gathered information about your business will help HMRC to form an analysis of your business. This will decide whether there are any hefty fines issued to your business or any other penalties for the mistakes that you have made. You will get a notification for any additional tax payments as well. You will get suggestions and recommendations to make certain changes in the details of your business. You should ensure to follow the suggestions and make the changes accordingly at your earliest.
The Bottom Line
Now that you have gathered a fair amount of information about VAT inspection tips, we can bring the discussion towards wrapping up. We can say that the process of the VAT inspection is stressful for most business owners, however, it turns out to be fruitful for the growth of your business if you know how to handle the process professionally. We hope these few minutes of reading have helped you to develop a better understanding.
Disclaimer: The information about VAT inspection tips provided in this blog includes text and graphics that are general. This does not intend to disregard any of the professional advice.