We have dealt with a few VAT enquiries over the 22 years we have been providing bookkeeping services and submitting monthly and quarterly VAT returns and we are very proud of the fact that none of our clients have received a penalty. We know quite a bit about VAT, although we are not VAT experts by any means and will advise you to get advice from a VAT specialist if we don't know the answer to a particular question.
What is involved in a VAT Enquiry
When doing an enquiry HMRC will always ask for a copy of the VAT return and often up to 10 of the largest sales and purchase invoices. They may ask for more than one VAT return if they are doing a check going back 4 years rather than a single VAT return which has an unexpected refund. They will check the documents provided to make sure they are made out to the company and have a VAT number on them.
They may also have sent a list of 10-20 questions to be answered which relate to the business. For example if you have registered for VAT and you have put an expected turnover which you haven't achieved - instead you are receiving refunds - they will be asking questions about this.
What about receipts?
As bookkeepers we insist on having VAT receipts or VAT invoices to claim VAT and we check that they are made out to the correct organisation and have a VAT number. It may be annoying finding and sending these but if you have a VAT inspection you will have nothing to worry about because we won't have claimed VAT on anything that you haven't provided a receipt for or anything which is not business related. And when HMRC ask for purchase invoices or receipts we know that we have them available.
We are very wary of card receipts - those ones that don't show what you have bought and don't have a VAT number. VAT cannot be claimed on these. We always need the receipt that shows the detail and the VAT number. Fuel receipts particularly may have non allowable expenses on them - subsistence for example when your base is just around the corner, or tobacco. If we are not provided with proper VAT receipts for fuel purchases we will not claim any VAT, so you could be losing out on VAT to claim back. Receipts are important, not just for VAT purposes, but for identification of the purchase. All purchases need to be allocated to an account code so that you can identify the level of costs for aspects of your business month on month or year on year.
It is every businesses' responsibility to be able to prove their business expenses, whether VAT registered or not. If we do your bookkeeping that is why we will ensure you provide every receipt so that we can claim back all the VAT possible. It is our job to make sure that everything is accurate and that if a VAT enquiry occurs we have no concerns about providing the information they ask for.
Summary
For the majority of businesses VAT is straightforward when you have the knowledge and experience to know what you can and can't claim VAT on. As bookkeepers we have that knowledge and experience and are confident in the VAT returns we do for our clients to deal with any VAT enquiry.
So if you are fed up doing your own bookkeeping and VAT returns get in touch with us on 01722 341820 to see how we can help you.
