Share this content

Unusual trading activity

We have spotted some discrepancies in VAT returns and are unsure of whether to submit an SAR

Didn't find your answer?

Hi,

We have spotted some unusual invoices betweeen two trading companies (closely linked but not with the same management/ownership structure).

The business is complex and makes transfers back and to between the companies which have proved impossible to reconcile.  It looks on the surface like wheeling and dealing but is just questionable enough to worry me.  I have spoken to the NCA and HMRC who are as much use as a chocolate tea pot and have reached the conclusion that our course of action should be to:

1. Inform them of the shortfalls in their trading practices

2. Give them a quarter to rectify them

3. If not rectified, make an SAR to the NCA

Thoughts.....

KFK

Replies (10)

Please login or register to join the discussion.

avatar
By WhichTyler
08th Oct 2019 16:34

Are any of them your clients?

Thanks (0)
Replying to WhichTyler:
avatar
By KungFuKipper
08th Oct 2019 16:37

Yes, both of them. The complexity in part is because they invoice and then settle over several days in smaller amounts. Both ways (although not at the same time).

Thanks (0)
Replying to KungFuKipper:
avatar
By WhichTyler
08th Oct 2019 16:50

Are you auditing them or just accounts prep?

I'm not in practice but do you have to take certain steps to assure yourself that you have an good understanding of your client's business operates?

Thanks (0)
avatar
By Vaughan Blake1
08th Oct 2019 16:42

Is the business actually complex, or is it made to look so to hide something?

Thanks (0)
Replying to Vaughan Blake1:
avatar
By KungFuKipper
08th Oct 2019 16:49

One never knows - it does make rec extremely difficult short of full audit/forensics. Ineptitude and hiding stuff deliberately look surprisingly similar!

Thanks (0)
paddle steamer
By DJKL
08th Oct 2019 16:49

How are there vat return discrepancies?

Re small amounts/parts of invoices being paid ,have you asked your client why this is the case?

I think I would want a clearer understanding why the two business entities operate as they do before I jumped to conclusions, nothing in your post really explains the issue.

Thanks (0)
Replying to DJKL:
avatar
By KungFuKipper
08th Oct 2019 16:55

The discrepancies are a small VAT reclaim on the main trading business each quarter with a smaller liability than we would expect on the second business. This is explained by the transfers between the companies of both sales and costs.

The client has a former Director who still does the invoices/books and apparently this is the way he works (we can't easily speak to the guy although we do have a conversation booked in for tomorrow evening to explore this further).

I agree - it is difficult to get to the bottom of the situation even when working with the clients (I am not being deliberately vague although the accountant working directly with the client could probably give more clarification).

Thanks (0)
Replying to KungFuKipper:
paddle steamer
By DJKL
08th Oct 2019 16:59

Invoice or cash basis?

Thanks (0)
avatar
By unearned luck
09th Oct 2019 01:24

You seem to be suggesting that each company's accounts in the other's bought and sales ledgers do not match. If so, this is then that is poor bookkeeping, at first sight.
you said that 'Ineptitude and hiding stuff deliberately look surprisingly similar', so why have do you suspect the latter over the former? At the moment, as you haven't said anything more, it seems to me that you are speculating before you have had the clients' explanations.

Thanks (0)
avatar
By bernard michael
09th Oct 2019 10:20

What does it say on the invoices - are they all the same but for different amounts ??

Thanks (0)
Share this content