Share this content
0
541

How rigorous are VAT inspectors on VAT receipts

How vigorous are HMRC VAT inspectors when it comes to insisting on VAT receipts

Haven't had to go through a VAT inspection yet with a client but I wonder how insistent VAT inspectors are with receipts to support VAT claims?

For example if a client spends money with Vodafone, BT, Currys, B&Q, Wickes etc etc and other well known national names would HMRC still insist on seeing a VAT receipt even though it would seem pretty obvious those supplies will have charged VAT?

I can see more amd more smallish traders just using bank downloads to enter up their books and they will probably think thats enough. Sure it will be even more of an issue under MTD

Replies

Please login or register to join the discussion.

By DJKL
07th Nov 2017 21:15

Had one about 2 years ago, client with an initial reclaim on registering (stock in hand)

They did wade through purchase vouchers and check till zs, I suspect they will want to see them. On the plus side got a compliment from Inspector (or whatever now called) re quality of records, bank recs on file, purchase and sales sheets with daily sales recorded and reconcilled to credit card company monthly reports, monthly cash account.

I must admit I tend to shout at clients "no voucher no vat" and always review them quarterly when preparing returns.

Where things get trickier is online purchases, chasing the actual invoices down can be a real chore. The other area where I insist is gas and electric, without invoices you can never know what the vat amount was, mobile phone bills can be similar.

By the way, with say Vodafone you cannot be certain vat is 20% on whole bill, some calls/charges do not get charged at 20%, so taking 1/6th of bill could be wrong vat amount.

Thanks (0)
avatar
07th Nov 2017 22:08

I too am a 'no vat receipt, no vat claim' nag. Work on the basis that every client could get a VAT inspection at any moment and therefore should pass with flying colours if they do. Had three now and no probs so it's served me well, so far. One didn't check a lot of papers, picked up on a few of the bigger bills and then went in randomly on the rest. Also checked claims done via C79s for imports and vat correct on such as eBay, Amazon type sales. Another was keen on tax points for a business taking large deposits. Nothing too onerous. Mostly I guess it depends on the type of vat inspector you get as some go in all guns blazing assuming all folk are vat cheating gangsters, whereas some are actually human! Don't offer them coffee!!

Thanks (0)
By DJKL
to Cheshire
07th Nov 2017 23:51

Do offer them coffee (very hot), also chat with them about anything, like football. If they have set aside x hours waste as much time as possible so less time for checking.

I worked for a firm where one on the partners was a former professional footballer (a pretty good one at that), once we knew they liked football we could roll him in and football yarns could waste a fair bit of time.

Thanks (2)
avatar
to DJKL
08th Nov 2017 00:01

I can easily do the chat bit and tend to talk peoples socks off at the best of times. Including about football.

My Dad had a particularly vicious VAT inspector turn up at his place, who when offered a coffee asked my Dad if he was trying to bribe him! Probably not helped by my Mother complaining about being an unpaid tax collector for the revenue, which she has been doing since VAT was introduced!

Thanks (0)
to Cheshire
08th Nov 2017 17:45

Our helpline suggested not making the records too tidy as the inspector has a day to fill and if they find the answers too quickly, they'll just spend the rest of the day digging!

Thanks (1)
avatar
08th Nov 2017 11:58

General rule to apply is no VAT receipt, no claim.
BUT
see this:-
https://www.gov.uk/hmrc-internal-manuals/vat-input-tax/vit31200

Thanks (0)
avatar
08th Nov 2017 12:34

Wanderer's link looked very interesting and would seem to indicate if the inspector is being sensible and using his discretion then if he sees say a payment to BT or Vodafone (or Wickes or B&Q) payment on a bank statement and it appears to be a reasonable expense for that business then the VAT input claim should be allowed.

It would seem to be against the spirit of their own guidance if the inspector saw a payment to say Vodafone of £60 but disallowed he VAT because there was no bill.

As pointed out it is sometimes a real pain trying to download invoices for some of these direct debit type transactions

Thanks (0)
By DJKL
to anneaccountant
08th Nov 2017 12:52

But what is the vat on the £60 to vodafone, it may be £10, it may not.

I am sitting looking at our 2/9/17 EE bill, Net 63.58, vat £11.12, gross £74.70, the vat is not 20% on all as the bill includes a charge "Full Cover" of £8.00 that is an exempt supply.

Also utilities re heat and light, small supply at 5% vat or large supply at 20%, we have both, sometimes one supply has one month at 5% next at 20%, have even had at least one (annual correcting from CNG) with supply split:

184.04, vat 36.81- rate 20%
(23.46), vat (1.17)-rate 5%
10.93, vat 2.19-rate 20%

Total 171.51, vat 37.83

And given not everything has vat when you think it ought, given Amazon purchases are a nightmare re vat (especially downloads) ,seems to me that without vouchers you actually do not know correct position, e.g Google Adwords reverse charge, they are a right royal pain, I expect moreso if partially exempt sales.

Thanks (0)
08th Nov 2017 13:13

The younger clients can be a nightmare when you take the view no receipt no claim They always sign up for paperless billing and of course never print copies!

Thanks (0)
avatar
By cbp99
08th Nov 2017 13:24

My experience is that Vat inspectors take a risk-based approach, and we do similarly, based on amount, nature of the supply, our knowledge of the client etc.
I agree that supplies via Amazon, Paypal etc are problematic, and in these cases we would not normally claim the Vat without a receipt.
However it would make no sense to deny the Vat on say 2 payments to Vodafone, when no Vat invoice is available, when claiming for all the others.

Thanks (0)
avatar
By GW
08th Nov 2017 13:28

Client had an inspection a month ago where the inspector picked a sample of transactions and wanted VAT invoices for all the sample. They also went as far as looking at numbers of cups of tea bought to decide if the VAT should be disallowed for entertaining and in the case of airport parking was cross referencing to other documents in case it wasn't part of a business trip. They seemed particularly concerned about private expenses going through the business with VAT being claimed, so Currys, B&Q etc payments without invoices would have been a problem, but then we did have to explain to the inspector that VAT rules on printed matter didn't apply to an invoice for "Magazines 7.62mm"

Thanks (0)
avatar
to GW
08th Nov 2017 13:31

"Magazines 7.62mm" - Sounds like an interesting business. :-)

Thanks (0)
By DJKL
to paulwakefield1
08th Nov 2017 14:22

Presumably for the credit control department.

Thanks (0)
avatar
08th Nov 2017 16:34

It would appear things depend on how keen the inspector is to insist on applying the letter of the law.

I agree with the basic principle that no receipt no VAT and it is a drum I beat like many other here but it doesn't sit well alongside digitalisation which HMRC are so keen on and paperless administration for sure.

I agree with the Vodafone situation that the VAT won't generally be exactly 20% but I would really hope the inspectors would adopt a risk based approach and not split hairs over a few quid.

Probably naive!!

Thanks (0)
Share this content