Is it time for a VAT Health Check?

The VATMAN is coming.  No not the one from HMRC, this one is called David Barraclough, he’s worked for HMRC for 38 years, has recently retired and has now joined Wright Vigar.  Understandably, he knows HMRC’s methods and people.

At Wright Vigar we are delighted to be able to offer a ‘VAT health check’. This will involve David coming to your business premises to discuss the structure and organisation of the business, it’s a bit like an official VAT visit, but without all the stress.

David will discuss VAT specific areas relating to your business; he can point you in the right direction, make recommendations and aim to save you money.  David has carried out thousands of visits and usually finds something amiss, often in favour of the business.

The length of the check can be geared towards your business and requirements but should normally take a couple of hours and as well as making verbal recommendations and highlighting any risk areas on the day, a report will be sent to your business confirming the relevant points.

Why have a VAT health check ?

In the current climate, where errors and noncompliance are hitting businesses with interest and penalties, it makes sense to have a VAT health check to help prevent problems and give some peace of mind.

Here are some practical reasons why David believes a VAT health check is worthwhile:

• If HMRC suspect that VAT errors have crept in innocently, they can go back four years and claim unpaid tax with interest plus penalties. If they think you have been careless with your VAT returns, they can go back six years. But if they believe you have been deliberately false, they can go back 20 years.
• A voluntary disclosure should be made if the net value of errors found on previous returns is between £10,000 and £50,000 and exceeds 1% of the net outputs (box 6) on the VAT return, or if the errors found is greater than £50,000.
• Interest is due, currently 2.75%, on errors identified by HMRC and assessed for, from the period in which the error was made. This includes assessments made following a VAT visit, but also when you discover an error yourself and make a voluntary disclosure.
• Penalties are worked out as a percentage of the “potential lost revenue” (PLR), the amount that arises as a result of correcting an inaccuracy.
  – The penalty can be as much as 100% if it’s a deliberate and concealed inaccuracy.
  – A careless error can range from 15% to 30% if found by HMRC, or 0% to 30% if voluntarily disclosed.

The ranges are set so that reductions can be made for the quality of the disclosure, depending on how much the business, “tells”, “helps” and “gives” assistance to HMRC.

In our experience, when a business opts for a check, it is money well spent and can save thousands of pounds.

To discuss a VAT health check in more detail please contact David on 01522 531341 – or email David at david.barraclough@wrightvigar.co.uk –  he would be delighted to be able to give your business a clean bill of health!

Click this link to download the VAT health check flyer.