How to prepare for an HMRC inspection

HMRC Inspections: Be prepared, not scared

If you run a small business, staying on the right side of HMRC is likely to be high up on your list of priorities. If one day you find out that you are going to receive an inspection, you may panic even if you think you are doing everything right. Here's a quick guide to VAT inspections and what to expect so you can be prepared not petrified.

Set a time and place

The first thing that will happen is you will be contacted to set up a time and a place for your inspection. If the VAT office suggests a time that is not suitable, you do not have to accept this date. Instead, choose a date that is more suitable for you. You cannot get out of the inspection, but you can certainly set up a more convenient time.

Prepare in advance

Once the date is set for the VAT inspection, you will want to prepare everything well in advance. Inform your staff about the inspection so they know what is happening, and then prepare the previous three years of audited accounts. Also make sure that the person who compiles the accounts in your business can attend the inspection.

What to expect for first-time VAT inspections

The VAT inspector will visit at the agreed time. When they arrive, make sure that they only deal with you or a representative you have chosen. Treat them courteously – they are not here to catch you out – and make sure they are comfortable, then ask what they would like to check.

It is important that you make a record of the inspection and take note of everything that is said as well as the outcome. You do not want to worry about disputes after the inspection has ended. If the inspector makes any decisions, get them in writing.

If you have any questions, make sure you ask them and get the inspector's responses. If you are unclear on any of the answers, make sure you say so.

You can also get more details on VAT inspections at Gov.uk, so it is worth reading through this in advance.

Reduce the chances of an inspection

As you can see, there is nothing to worry about as long as you have everything in order. However, even the thought of an inspection can be a worry. Of course, if you can reduce the chance of an inspection, this is the best option, and there are a few things you can do.

The simplest steps to take include submitting accurate tax returns and submitting your returns on time. However, another thing to be wary of is any large changes in turnover or profit compared to the previous year. If there are large differences, this can catch the attention of inspectors, so it is a good idea to explain these in the return.

We will keep your taxes in order

If you are worried about your taxes, the best thing that you can do is get professional assistance. Let us help you to keep your VAT – and all your taxes – in check. We will ensure you comply with all the HMRC regulations so you don't have to worry.

One of our jobs is to ensure we keep on top of all the changes that HMRC makes. You can read about some of the recent changes to regulations and penalties in our guide, and you can rest assured that we are fully up to date with all the latest changes so we can help you to stay on top of your taxes without fear of what could happen during an inspection.

We also provide a comprehensive VAT service for businesses, which is designed to minimise problems with HMRC, so let us know if you would like any help.