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A VAT Inspection can lead to a VAT Investigation

In recent years, there has been much high-profile publicity of large cases 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.

Much more common are the day-to-day instances of VAT false declaration or under-declaration of VAT on VAT Returns. These will frequently involve suppressed sales (or cash in hand). Sometimes there will be inflation of purchase invoices or input invoices, often involving the creation of forged invoices and false accounting records. Very often this will also have a knock-on effect of evading a business’s corporation or partnership tax, and evasion of personal income tax by the entrepreneur.

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.

The vast majority of the time a VAT Tax Investigation will start with a VAT Inspection. This may be because HMRC believe that there are queries or may be irregularities that a 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 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 are concerned  that any of these things may be happening or are about to happen to you, it is vital that expert legal advice is taken from specialist VAT inspection and investigation lawyers. It may be appropriate to consider requesting the Contractual Disclosure Facility under Code of Practice 9 (COP 9), to make a voluntary disclosure and avoid any criminal investigation or sanctions.

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 instructing an accountant or a solicitor, you should be aware that information you provide to your solicitor enjoys a special status called legal professional privilege.

Your accountant cannot provide this protection, although they may be able to gain it if they are instructed by a solicitor. If there is to be an assessment of the tax due and a report prepared about your tax affairs, we can instruct an accountant on your behalf.

Who Can Help You?

Jonathan Wright


Mark Wilson, Partner at Richard Nelson LLP

Mark Wilson


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What we do...

Our VAT inspection and investigation team is made up of tax investigation specialists and HMRC fraud lawyers. We are available to provide a quick and nationwide response to any tax fraud related query.

We have an experienced a team of VAT inspection and investigation lawyers who have dealt with all kinds of  investigations in the past. We, therefore, know how to resolve VAT inspection and investigation as quickly as possible, whilst protecting your liberty, reputation and privacy and restricting the financial consequences you may face.

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