VAT investigations & disputes with HMRC
VAT Investigations
VAT investigations are usually prompted if a routine VAT inspection reveals irregularities, as a result of declarations that are out-of-pattern or if you work in what HMRC deems as “a high-risk sector”.
Intervention and inspection by HMRC can be started by anything from a pre-notification of an enquiry, to an unannounced, on-site inspection. You may possibly be required to produce documents for inspection and maybe for removal by HMRC. You may also be required to attend interviews.
We recommend that you get in touch with our VAT Team as soon as you hear from HMRC, so that we can assist you through the process.
Once HMRC have finished their investigation, they may present you with a penalty. However, with our advice, there may be a chance to reduce these penalties, structure a more favourable payment plan, or if you have a one of our VAT Health Checks prior to any contact from HMRC, to avoid this situation altogether.
Penalty rates for inaccurate VAT Returns
Careless (you fail to take reasonable care)
| Minimum Penalty (as a % of the tax) | Maximum Penalty (as a % of the tax) | |
| Unprompted: | 0% | 30% |
| Prompted: | 15% | 30% |
Deliberate (you give HMRC a document you know contains an inaccuracy)
| Minimum Penalty (as a % of the tax) | Maximum Penalty (as a % of the tax) | |
| Unprompted: | 20% | 70% |
| Prompted: | 35% | 70% |
Deliberate & Concealed (you give HMRC a document you know contains an inaccuracy and you have tried to hide that inaccuracy)
| Minimum Penalty (as a % of the tax) | Maximum Penalty (as a % of the tax) | |
| Unprompted: | 30% | 100% |
| Prompted: | 50% | 100% |