LEGAL LATEST
treating income correctly for VAT purposes and are recovering only the correct amount of input VAT on expenditure. Accordingly, the main information you must have ready for the inspector (bearing in mind some of this could be in storage) is: • Detailed back up to the figures in each box of each VAT return;
• Supporting invoices, receipts and purchase invoices;
• Bank statements; • Last four years of accounts. You may be wondering whether you have treated everything correctly. If you deal with your VAT returns yourself, take advice at this point from your accountant who can overview the records and provide an indication of anything that may HMRC may query. While there is little that can be done to rectify errors once an inspection has been announced, being aware of such issues so they can be openly discussed at the inspection shows HMRC you are willing to tell and help them and can help to mitigate potential penalties.
While HMRC prefer to hold the inspection at the business premises, this may not be practical and the inspector may agree to undertake it at your accountant’s premises, but HMRC will usually still want to inspect your business premises and speak to the business owner directly at some point; this is normal - don’t be alarmed! On the day, provide the inspector with the information above, and then be led by them in terms of whether additional
information is needed; there is no need to enter into prolonged discussion with the inspector at the outset; leave them to it, then answer any questions, if you can easily provide what they are asking for. You should not be afraid to say you do not have such information to hand, as you can ask for any queries to be addressed in writing to which you, or your accountant, can respond to at a later stage.
Once the inspector leaves you should have a good idea whether they are happy with everything or if they require further information. What then arrives in writing should not be a surprise!
These are areas you may wish to consider now in advance of any potential inspection, so you know all is in order if an inspection ever comes along!
The main message is however not to panic; put the brakes on and give yourself time to prepare for the inspection.
Thomson Cooper Accountants are auditors and advisors to the SMTA.
The Thomson Cooper VAT expert Lynn Gemmell can be contacted at
lgemmell@thomsoncooper.com
Based
on experience of recent visits to businesses in the motor trade it is likely HMRC will consider: • Cross border sale and purchase of vehicles;
• Sale of qualifying vehicles; • Recovery of VAT on purchase of vehicles and demonstrator cars;
• Operation of the second hand margin scheme;
• Zero rating of adapted vehicles for wheelchair users;
• Sale of accessories, including children’s car seats;
• Warranties and insurance; • Servicing and repairs versus VOSA MOT test fees.
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