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A VAT Inspection can lead to a VAT Investigation

The VAT lawyers at Richard Nelson LLP are specialists in advising and representing businesses faced with VAT inspections and investigations. Contact us to discuss your situation in confidence.

The most common situations are the day-to-day instances of VAT false declaration or under-declaration of VAT on VAT Returns. These often involve suppressed sales (’cash in hand’). Sometimes there will be inflation of purchase invoices or input invoices, including the creation of forged invoices and false accounting records. This will almost always have a knock-on effect of creating an evasion of a business’s corporation or partnership tax, and probably also personal income tax by the entrepreneur.

A seemingly routine VAT inspection can easily lead to a full investigation of all taxes, both business and personal.

In previous years, there has been much high-profile publicity of large VAT investigations involving fraudulent VAT reclaims or refund applications. These have been well-known as carousel or MTIC (Missing Trader Intra Community) frauds and include the situations where there are missing traders or hijacked traders. These cases have resulted in many prosecutions involving huge volumes of documents, and lengthy trials, and are often Very High-Cost Cases (VHCC).

A side-effect of these cases is the use of the Extended Verification Process (EVP) in relation to VAT refund claims where HMRC suspects a fraudulent scheme. The likelihood and duration of EVPs have increased. This will have a massive negative effect including for a legitimate business with a legitimate VAT refund claim. It is vital that businesses can demonstrate that they have the means of knowledge, of the legitimacy, in relation to their entire supply chain.

What to expect from a VAT Inspection & VAT Investigation

Occasionally, an HMRC VAT Tax Investigation will commence as a Criminal Tax Investigation, particularly where HMRC already have evidence of fraudulent returns, forgery or providing false information in a previous inquiry.

But the vast majority of the time a VAT investigation starts as a VAT inspection. This may be because HMRC believe that there are queries or irregularities that a targeted VAT inspection will reveal. However, very often this starts out as a purely routine VAT inspection (which all businesses will expect at some time). The danger here is that if there has been any VAT under declaration or input inflation, even if HMRC do not suspect at that stage, it may well be thrown up and spotted by HMRC at this stage. They may also require further records to be submitted which makes it impossible to hide any longer.

Get in touch

If you have received notification of a VAT visit, inspection or investigation from HMRC, have had one, or you are worried about any of these, contact our team without delay and speak to one of our tax litigation lawyers. You can contact our team via the following means:

This is where Richard Nelson LLP’s team of leading tax investigation lawyers can help. If you are under a VAT Inspection and Investigation and need advice then feel free to contact us today.

Solicitor or Accountant?

If you are considering contacting an accountant or a solicitor regarding a VAT investigation, you should be aware that information you provide to your solicitor enjoys a special status called Legal Professional Privilege (LPP).

LPP is a right that protects confidential relations between lawyers and clients and prevents them from having to be disclosed, even in court. This covers written and verbal communications to obtain and receive legal advice, and also communications when there is litigation or it is potential.

LPP only applies to lawyers and not to accountants or tax investigation advisers.

Who Can Help You?

Jonathan Wright

Partner

Mark Wilson, Partner at Richard Nelson LLP

Mark Wilson

Partner

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What we do...

  • Assessing the tax consequences (including challenges to what HMRC state);

  • Drafting of responses to HMRC enquiries;

  • Representing you and managing any meetings with HMRC;

  • Making a proactive voluntary disclosure to avoid an investigation;

  • Tactics and negotiation to minimise penalties;

  • Avoiding HMRC ‘naming & shaming’;

  • Representing you in a criminal investigation and at formal Caution Interviews;

  • Forensic investigation reports and written representations against prosecution;

  • Conducting requests for Formal Reviews and Appeals to the Tribunal;

  • Dealing with all contact with HMRC for you;

  • Applying Legal Professional Privilege, and Solicitors’ Confidentiality as your safeguards.

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