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If you have received a VAT Inspection letter you must read this article. A VAT inspector will aim to make a thorough review of your records, but there are some things he’ll pay particular attention to. These include:
In relation to VAT you have charged:
- If you have exported goods and not charged VAT, you must have proof of export documents attached to, or referenced to, the sales invoice or documents
- Where you have reduced the value of a sale (other than by discount), for example, you’ve made a partial refund to compensate a customer, you have a credit note to match
- Where your business pays for fuel for private motoring for directors or staff that VAT has been accounted for this using the fuel scale charge or one of the approved alternative methods
- Cash sales have been recorded, and VAT accounted for. If you make material levels of cash sales, the inspector will aim to check these ties up with bank deposits.
In relation to VAT, you have reclaimed:
- That you have an invoice or VAT receipt for each purchase for which you are claiming input VAT. Unless it is for a small cash item below £25.00, for example, an off-road car parking charge.
- Where you have paid UK VAT on imports that you have documentary evidence for this
- Where you use cash tills, that your figures match up to those on your VAT return
- Where you make supplies that are exempt, that you have:
>>>not claimed VAT on related purchases
>>>correctly restricted VAT claimed in respect of general purchases, i.e. overheads that relate to both VATable and exempt supplies.
General VAT matters:
- That the turnover figures in your accounts can be married to your VAT returns. These figures won’t match unless your financial year is the same as your VAT year, however, you must be able to show the differences which are due to timing
- If you’re operating a special VAT scheme, e.g. cash accounting, make certain the visiting VAT inspector is aware of this.