Has anyone got some vat inspection stories, i.e. what the vat office have done to a client that has chosen to interpret the rules in a how do I say it politely a 'del' boy manner?
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May I ask what the reason for your query is? Are we just sharing tales and do you have a story of your own to tell?
Sorry to disappoint you
but my experience is that the Del Boys who commit deliberate evasion get out comparatively lightly to the honest businessman who make a genuine mistake.
If you read the tribunal cases, you can see that even when assesments and penalties are upheld, they must be a fraction of what they have actually gotten away with.
Compare that with a client who makes a mistake with zero rating for example, co-operates with HMRC fully. OK, the penalty load is reduced but they will still pursue the VAT, even if they have no hope of recovering it from their customer.
I remember a top tale from a Vat course I was once on.
The guy giving the talk had been a VAT Inspector in the late 70's early 80's (when the sweeney and Professionals were on TV). He drove a Capri Ghia and wore a leather jacket and fancied himself a bit.
He attended a business premises that was suspected of wrong doings.
He knocked on the office door "Its a VAT officer here to inspect your records"
OK came in came the reply.
He pushed the door but it would not budge. He put his ear to the door and could hear a whirring noise.
Open up its the VAT OFFICE he said again.
Ok COme in came the reply.
Again the door would not budge and he could still hear the whirring noise.
Convinced the client had locked the door and was sitting there shredding his records he
took a few steps back and ran at the door kicking it off its hinges and bursting into the office.
when he picked himself up off the floor he found a secretary sitting sharpening pencils in an electric sharpener with a neat pile of VAT records on her desk.
The reason the door had not opened when pushed was it was a sliding door.
The records were as clean as a whistle and he had to explain to his boss why they had to pay for a new door on the clients office.
I am not sure if this was a true story (or a sort accounting urban myth) but it made the course more interesting.
I did also go out and buy a leather jacket.
VAT Tales
In 1992 I was asked by a client to see if I could help a friend who ran a pub which was having problems and was due an inspection. Transpired output VAT was based on purchases with a mark up (directed by Vat authorities). Two lady inspectors turned up - one obviously a trainee. I had all the records laid out and attended myself. After about six hours they went off and I asked were there any problems - no, just a couple of points was the answer. Next week the landlord got a demand for c. £6,000 unpaid VAT. The young lady who did all the work had used a calculator but obviously had not been taught to check her answers!! She calculated for instance the selling price of a pack of cigarettes as around £4.50 when they were about £2.00 or so. Same with beer sales. I spent a lot of time going through it all and could not make it add up so I called in a chartered accountant friend of mine to check my conclusions. He agreed with my numbers. After a lot of correspondence and phone calls I went to the top and demanded that the Surveyor from the local VAT office should meet me at the pub. He agreed that there had been an almighty [***]-up. The final note was that I obtained £750 compensation from them for my and my friend's trouble.