If your business is about to have a VAT inspection, what tips should you know? Below are 7 of the top VAT inspection tips:

1. Getting the Inspection on Your Terms

It is not wise to get a VAT inspection happening when you know that your business is going to be in a period that is really busy. As such, you should communicate with the HMRC directly and request for a delay. Often a delay will be granted for clients who need to time to get their records together.

For example, maybe the records are in cold storage or need time to create an office for the inspector rather than having the Vat inspector around the premises for everyone to see including suppliers, customers, visitors, and even staff.

The truth is that this may not always work, but you should always try to do your best to get the Vat inspection at a convenient place and time. We have realized that VAT inspectors are always keen to work together with a business when it comes to this.

2. Prepare Well

This is actually straight forward: it is wise to prepare before a VAT inspection. Understand everything you can about your upcoming inspection.

Visit VATIT and VATGlobal to keep up to date with the latest tax news. Preparation means ensuring that you have provided all the information needed or requested. Ensure there is no information missing. Such problems affect your reputation, which often causes delays and more delays and could be expensive for you in the long run.

Also, try getting follow-ups from the inspector. Of course, the bare truth is that when a VAT inspector sees scrupulous records, they are less likely to suspect poor record keeping.

Furthermore, some inspectors have commended us for keeping good records, which made them spend less time reviewing them. This is, of course, a good result for everyone that comes through preparation.

3. Be Honest and Upfront

The truth is that mistakes do happen and it happens in all businesses. Examples may include; business has not changed VAT on certain products, or vat claim on something that was not supposed to be, and so on.

Well, what matters is that if you discover any mistake during preparation before the inspection, it is wise to always disclose the information upfront to the inspector. Why should you do this? Well, the reasons are:

  • Getting it out of the way – This means that you do not have to worry about it anymore. Furthermore, it will give you a psychological boost rather than worrying constantly about it being discovered. In other words, limit your worries by being honest.
  • May prevent penalties – When a Vat inspector finds such a mistake, chances are that they are going to take the digression seriously and may give you their highest penalties.

However, being upfront and honest about a mistake, they may give you light penalties and at times agree to suspend them. Remember, HMRC works on a harsher penalty system where the business is seen or found to deliberately withheld information.

4. Inspection Insurance Cover

It is wise to ensure that you have taken an insurance cover for the inspections. It is quite evident that it takes time for your accountant to prepare for the VAT inspection.

Although you may have paid your accountant very well for the job, it is unlikely they have taken a cover for the VAT Inspection. As such, it is important to check with them and try to find out if they offer Tax/Vat inspection insurance. You should also try to find out if it is available through the FSB or any other provider.

5. Take Advantage of Online Accounting (Receipt Bank and Xero)

In the past, we have acted for clients with Xero and receipt bank. For us, this meant effectively managing Vat inspections paperless. All purchase invoice, bank information, vat records customer information and even sales invoice are available within Xero. The Receipt bank stores every purchase invoice you have ever made. This puts you in a far better position, which means less time preparing.

6. Follow up and Give the Inspector what they Request

If you have to give the inspector any follow-up information or explanation, it is wise to do it as soon as possible. This is because:

  • It helps get them out of the way. As mentioned above, getting things out of the way helps and improves psychology.
  • Avoiding giving the inspector an opportunity to brag or accumulating more penalties because the HMRC may take it as an example of non-compliance often if you are marked as a none-compliant business, you will surely receive the most severe penalties available.

7. Learn from Experience and Implement any suggestions Made by the Inspector

At times, there may be some issues or aspects identified by the HMRC, which often demand improvements. These issues do not always attract a penalty. As such, it is always wise to take more of such points and address them as soon as possible. You do not want the follow-up inspection to occur and still penalized for the same mistake again.


Hopefully, this short article has helped to explain more about VAT inspection and ways to make it a positive experience for your business. For any queries or questions; comment below and we will respond. If you have vat inspection and need advice, give us a call today. We are here and ready to make your work easy and free from penalties.


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