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VAT return check

More detailed enquiry

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As with many construction clients, they are now due a VAT refund due to the DRC. HMRC have reviewed the first VAT return which showed a small refund due for a client. All questions were answered and nothing untoward has been found. 

The reply from HMRC (in an email) is now that they wish to see four years VAT returns, net sales reconciliations, copy bank statements etc. I am probably clutching at straws here but the email isnt a formal enquiry into those years so are they able to ask for this informatoin in this way? I dont want to be seen to being difficult but I find it very strange in the way they have approached this. It is not as if they are saying, we have found X and therefore we will open an enquiry into earlier years. 

Any thoughts would be much appeciated. 

Replies (5)

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By ireallyshouldknowthisbut
29th Oct 2021 12:58

Negotiate. Ask them to pick one or two other quarters rather than sending all 16.

As for the formal vs informal enquiry I have seen others comment they your client is better protected in a formal enquiry but I don't really know the ins and outs of it.

As we have insurance backed investigation cover, I would tend to actively ask for them to open one so we can make a claim so I cant really tell you what the downsides might be as we do it "for the cash".

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Jason Croke
By Jason Croke
29th Oct 2021 13:21

The days of receiving a formal letter are long behind us. We still do get letters from HMRC, but equally as many phone calls and emails.

At the end of the day, HMRC can query and investigate any VAT return at anytime. They always ask for 4 years, but see if you can give them 12 months as they rarely bother going that far back unless they really are scraping the barrel.

I can't remember the last time I had to give 4 years worth of records, but if you can't agree a shorter window or if you refuse, HMRC will just issue an information demand which you have to comply with or else get a penalty, so it is always best to be polite but firm and negotiate a shorter window, initially, and once HMRC realise there so nothing wrong with the client, they'll move on to someone else.

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By Jigs
29th Oct 2021 13:48

Thank you both

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By lionofludesch
29th Oct 2021 13:49

They won't look at four years' stuff even if you provide it.

Ask them to cut it down to a sample, whilst acknowledging that they reserve the right to ask for more later.

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By Slim
29th Oct 2021 16:38

Out of interest what sort of level turnover and purchases do they have?

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