Is it Time for Your Check Up?

In our previous blog, we highlighted the importance of taking professional advice if you receive a VAT assessment or penalty from HMRC. However, rather than react to HMRC’s actions, we would recommend that a more proactive approach is taken.

 

At AAB, we offer a VAT health check which is aimed at ensuring that you are applying the correct VAT treatment to your business transactions. Not only will we  test your compliance processes, more importantly, we will give you peace of mind that you are minimising the risk to VAT exposures and penalties. Our health check service is designed to maximise potential opportunities available to the business and to highlight any issues so that problems are not stored up.

In my experience, preventative action will generally be much less expensive than appealing against HMRC’s decisions. Once HMRC have reached a decision, it can be much more difficult to get them to change their position, particularly if there is a monetary value attached in the form of an assessment. This is illustrated clearly in the Gekko and Co decision discussed in our previous blog, where HMRC continued to pursue amounts as small as £8.85!

The benefits to you

The main purpose of a VAT health check is to ensure that, as a business, your VAT processes are compliant with current VAT laws. Importantly, for careless errors identified by HMRC, the minimum penalty rate is 15%.

Where issues are identified and disclosures are required, our health check service can:

• Identify, quantify and disclose an error to HMRC before they have the opportunity to uncover it;
• Help demonstrate that you took “reasonable care”; removing any errors from the penalty regime; or
• Where HMRC do not accept that point, prepare an argument for removal, reduction or suspension of the penalty.

In addition to ensuring compliance, our health check will focus on recognising prospective opportunities for saving VAT by ensuring that all available reliefs are applied. With its impact being “above the line”, minimising your VAT burden will have a direct effect on your business’s profitability.

A standard health check would include:

• Confirmation that you have correctly identified the VAT liability of your supplies/income streams.
• A review of your VAT recovery procedure and processes, including your partial exemption method (as applicable).
• A review of the VAT treatment applied to non-core transactions such as property purchases and sales.

Our deliverable will be a traffic light report that will highlight areas of concern or opportunities for real cost savings.  In addition, it will outline the VAT gaps in your processes and knowledge, identifying training needs within your business.

If you would like further information about our VAT health check or would like to understand more about the other services we offer, please contact Alistair Duncan, Director or your usual AAB contact.