A client has received a letter from HMRC accusing them of not charging VAT on all of their toasted sandwiches. They came to this conclusion comparing average VAT rates vs my clients VAT submissions.
HMRC has asked the client to recalculate what the VAT should have been should he have charged the VAT correctly. The client hasn't said to me what the process is re the actual treatment of the VAT is in the business. I constantly warn my Subway clients that HMRC has been focusing on this.
What advice do you have for me and the client - do we go to HMRC with our tails between our legs or seek legal advice?