VAT Inspections & Investigations
VAT Inspection & Investigation Solicitors
The recent surge in HMRC VAT inspections has left many businesses concerned about compliance and potential penalties. With the UK government intensifying efforts to enforce tax compliance, being prepared has never been more important for businesses.
Our VAT inspection solicitors and experienced accountants possess extensive experience in successfully managing HMRC disputes and VAT investigations. Whether you are facing a VAT inspection, challenging an assessment, or have any other HMRC-related concern, we are here to protect your business.
VAT Inspection and Investigation
At Axis Solicitors, our team of VAT specialists is highly experienced in advising and representing businesses undergoing VAT inspections and investigations. We understand the complexities and pressures involved, and offer confidential, expert guidance tailored to your specific situation.
Common issues we encounter include VAT misdeclarations or underreporting on VAT returns, often linked to unreported cash transactions (“cash in hand”). In other instances, businesses may face accusations of inflating purchase or input invoices, fabricating invoices, or falsifying accounting records. Such practices not only affect VAT but often lead to the evasion of corporation or partnership tax, as well as personal income tax liabilities for business owners.
What may begin as a routine VAT inspection can rapidly escalate into a thorough investigation covering all business and personal taxes.
In recent years, large-scale VAT investigations have received significant public attention, particularly in cases involving fraudulent VAT reclaims or refund applications. These are commonly linked to carousel fraud or Missing Trader Intra-Community (MTIC) fraud, where missing or hijacked traders are involved. These cases often lead to lengthy, complex prosecutions, involving extensive documentation and trials, and are frequently classified as Very High-Cost Cases (VHCC).
Additionally, the use of the Extended Verification Process (EVP) by HMRC has increased, particularly in cases where fraudulent VAT refund claims are suspected. This process can significantly delay legitimate VAT refund claims, negatively impacting businesses. It is therefore essential that businesses can demonstrate their awareness and due diligence regarding the legitimacy of their entire supply chain.
If your business is facing a VAT inspection or investigation, contact Axis Solicitors for trusted, professional advice. We are here to support you every step of the way.
Our VAT Solicitors
If you are concerned about an upcoming or ongoing VAT inspection or investigation, it is crucial to seek expert legal advice. Whether you have already been investigated, are currently under inspection, or are anticipating one, Axis Solicitors can help minimise potential repercussions and protect your business.
- Legal Professional Privilege: Our solicitors at Axis Solicitors benefit from legal professional privilege, ensuring that all communications between our criminal tax solicitors and clients remain confidential, only disclosed with the client’s explicit consent.
- Handling HMRC Communications: We manage all aspects of communication with HMRC, from drafting responses to representing you in meetings.
- Negotiating Penalties: Our team works diligently to reduce penalties and prevent your business from being publicly named and shamed.
- Criminal Investigation Defence: We provide robust representation in criminal investigations and at Caution Interviews.
- Forensic Investigations & Defence: We prepare detailed forensic investigation reports and written submissions to challenge potential prosecutions.
- Appeals & Formal Reviews: We conduct formal review requests and represent clients in appeals before the Tribunal.
In some cases, HMRC VAT investigations may commence as Criminal Tax Investigations, particularly when HMRC already holds evidence of fraudulent returns, forgery, or the submission of false information in earlier inquiries.
However, the majority of VAT investigations begin as routine VAT inspections. HMRC may initiate an inspection due to suspected discrepancies or irregularities that they believe a targeted inspection will uncover. More commonly, businesses will face routine VAT inspections as part of standard HMRC practice. The risk arises if there has been any under-declaration of VAT or inflation of input VAT. Even if HMRC does not initially suspect wrongdoing, such issues can be identified during the inspection, leading to further scrutiny and requests for additional records, making it difficult to conceal any inaccuracies.
VAT Solicitors & Accountants
If you are deciding between contacting an accountant or a solicitor regarding a VAT investigation, it’s important to know that information you provide to a solicitor benefits from Legal Professional Privilege (LPP), a protection that ensures confidential communications between lawyers and clients cannot be disclosed, even in court. This privilege covers both written and verbal communications for the purpose of obtaining legal advice, and for cases involving existing or potential litigation.
LPP is a right that applies exclusively to lawyers, not to accountants or tax investigation advisers. However, at Axis Solicitors, we offer the best of both worlds.
How We Can Help
- Legal & Accounting Expertise: While our solicitors handle the legal aspects of your VAT investigation, we also benefit from having expert VAT accountants available to provide specialist knowledge and advice whenever required. This collaboration ensures that both our solicitors and clients receive comprehensive, informed guidance.
- Assessing tax implications and challenging HMRC’s claims;
- Drafting responses to HMRC inquiries;
- Representing you in and managing any meetings with HMRC;
- Making proactive voluntary disclosures to prevent an investigation;
- Developing strategies and negotiating to minimise penalties;
- Preventing HMRC from ‘naming and shaming’ your business;
- Representing you during criminal investigations and formal Caution Interviews;
- Preparing forensic investigation reports and written defences against prosecution;
- Handling Formal Review requests and Appeals to the Tribunal;
- Managing all HMRC communications on your behalf;
- Applying Legal Professional Privilege and ensuring solicitor-client confidentiality as your protection.
At Axis Solicitors, our integrated approach, combining legal and accounting expertise, ensures that you receive the highest level of support during your VAT investigation, protecting your rights and safeguarding your business.
VAT Inspections
If you or your business is found to have breached VAT regulations, you could face prosecution for:
- VAT, invoice, and payment fraud
- Tax fraud
- Excise or diversion fraud
- Violations of customs law
- Cheating the public revenue
Penalties resulting from VAT inspections can be extremely severe. Additionally, the reputation and future of your company, as well as the security of your employees, may be jeopardised if the outcome of an investigation is unfavourable. Therefore, it is crucial to seek advice from experienced VAT inspection solicitors as early as possible to protect your interests and mitigate risks.
VAT Inspection Visits
Typically, only one HMRC officer will attend your premises for the inspection. However, if your company is particularly large or complex, two officers may be present.
When meeting with the inspectors, be sure to have the following readily available:
- Your company’s VAT certificate
- Your company’s registration certificate
- Annual accounts
- Records of all VAT paid and claimed throughout the tax year
- Detailed accounts, including petty cash and sales registers
- Invoices for both sales and purchases
- Company bank statements
- Any other supporting documentation relevant to the inspection
As the business owner, you are required to be present during the HMRC visit. While you don’t need to stay with the officers the entire time, they must be able to ask you any questions as needed. Anyone responsible for handling your company’s accounts should also be available to assist.
The attending officer has the right to take copies of any documents they need for further review. If they have previously inspected certain documents, they can retrieve them without needing your approval. However, if they are reviewing something for the first time, you’ll need to provide them with the original or a copy.
Important Reminder: If the HMRC officer wishes to take original documents, make sure you obtain a detailed receipt of everything they remove from the premises.
If you have any concerns or questions about the officer’s actions during the inspection, don’t hesitate to contact your solicitor for guidance.
HMRC VAT Investigations
VAT is a major revenue stream for the UK government, and as a result, HMRC is vigilant in ensuring businesses meet their VAT obligations. Each year, HMRC conducts hundreds of thousands of VAT investigations to verify that taxpayers are paying and reclaiming the correct amounts of VAT.
If you have received notification from HMRC regarding a VAT investigation into your business, our experienced team of HMRC solicitors is ready to assist. As recognised specialists in VAT and HMRC-related legal matters, we will guide and support you throughout the investigation process. Our goal is to ensure that you meet your legal responsibilities while also ensuring HMRC officers do not overstep their authority.
Should the investigation reveal issues with your VAT accounting, or if you suspect there may be discrepancies, we will provide expert advice on how to address these problems and work towards securing the most favourable outcome and minimal penalties.
VAT Investigations – Our Solicitors & Accountants
Our VAT fraud solicitors at Axis Solicitors support businesses of all sizes facing VAT investigations. From inflated refund claims to complex cases such as Carousel fraud or Missing Trader Intra-Community (MTIC) fraud, we provide clear, practical advice with a strong commercial focus. We guide you throughout the entire process, handling all communications with HMRC and ensuring their officers stay within the boundaries of their authority. For example, if HMRC attempts to review records beyond the legally allowed time frame, we will challenge their request.
Should HMRC conclude that your business has committed VAT fraud, we will act swiftly to protect your position. This may involve appealing the decision, negotiating a settlement, or representing you in court. Our aim is to minimise the impact on your business while securing the best possible outcome.
FAQ: VAT Inspections & Investigations
VAT fraud occurs when a business intentionally avoids paying the VAT owed to HMRC or unlawfully reclaims VAT that was never paid. One common example involves a business agreeing with a customer not to charge VAT on a transaction if the customer pays in cash. This deprives HMRC of the VAT due and is considered fraud. More serious forms of VAT fraud, such as Carousel Fraud or Missing Trader Intra-Community (MTIC) Fraud, can involve complex schemes across multiple jurisdictions, causing significant financial losses to the Revenue.
If you are concerned, let our VAT fraud investigation solicitors will review your situation and determine whether your concerns are valid. If fraud has occurred, we can help devise a strategy to address the issue. In many cases, making a voluntary disclosure to HMRC and cooperating with their officers can lead to a reduced penalty. We will assist you in gathering the necessary documentation and present your case to HMRC in the most favourable way possible.
By addressing your VAT concerns early, you can minimise potential penalties and demonstrate a proactive approach to compliance.
HMRC initiates VAT fraud investigations based on various risk factors, including the industry in which a business operates. High-risk sectors, particularly those with complex supply chains, are more likely to be flagged for investigation. However, being selected for a VAT assessment doesn’t necessarily indicate wrongdoing. Investigations can be triggered by general risk assessments, but sometimes they are prompted by specific factors, such as inconsistencies in your VAT returns or a tip-off from a third party.
If you are notified of an upcoming VAT inspection, it’s critical to seek advice from VAT investigation solicitors immediately. Our team will help you prepare for the inspection, ensure you’re aware of what to expect, and advise on the best approach when dealing with HMRC officers. We can also attend the inspection with you, assisting in responses and ensuring the process goes smoothly. Early intervention can help protect your business and mitigate any potential risks.
The outcomes of a VAT fraud investigation can vary significantly depending on the specific circumstances of the case. HMRC treats VAT fraud very seriously, and potential penalties include repayment of the owed VAT, unlimited fines, imprisonment, public naming and shaming, and even director disqualification orders. However, the way the investigation is handled can influence the severity of the outcome. Transparency, cooperation, and a proactive approach can often lead to reduced penalties.
Our VAT fraud investigation solicitors are here to guide you through the process, advising on the best strategies to mitigate the impact of the investigation and encouraging HMRC to impose a more lenient outcome where possible.
VAT fraud investigations can be stressful and disruptive, often resulting in significant penalties if VAT fraud is proven. Having the expertise of Axis Solicitors by your side ensures you are well-equipped to manage the investigation and gives you peace of mind knowing your case is handled professionally and strategically.
Our VAT fraud solicitors at Axis Solicitors support businesses of all sizes facing VAT investigations. From inflated refund claims to complex cases such as Carousel fraud or Missing Trader Intra-Community (MTIC) fraud, we provide clear, practical advice with a strong commercial focus. We guide you throughout the entire process, handling all communications with HMRC and ensuring their officers stay within the boundaries of their authority. For example, if HMRC attempts to review records beyond the legally allowed timeframe, we will challenge their request.
Should HMRC conclude that your business has committed VAT fraud, we will act swiftly to protect your position. This may involve appealing the decision, negotiating a settlement, or representing you in court. Our aim is to minimise the impact on your business while securing the best possible outcome.
Worried About a VAT Enquiry?
Consult Our VAT Investigation Solicitors & Accountants.
Our solicitors offer client privilege and our accountants provide specialist expertise.
Contact us for a free initial assessment.
