VAT inspection is not something you want to experience. It’s an experience like no other.

You know how some people just don’t like to fly? Well, you will have that feeling when you get your VAT inspection done.

VAT inspection is a process where the HRMC inspects your business to ensure you pay the right amount of taxes. The whole process can be stressful for a lot of reasons.

Here is all you need to know about VAT inspection:

What triggers a VAT inspection?

When you’re an entrepreneur, sometimes you have to accept that you will get inspected.

But what exactly triggers a VAT inspection? And why does HMRC need to do it?

Unfortunately, there are many factors at play when it comes to inspections—and they all have to do with your business’s credibility.

Here is a listing of some reasons that might make the agency inspect your VAT figures:

  • Failed credibility check
  • Suspicious information from the public
  • Abnormally large VAT claims
  • You have a terrible history of late payments, penalties, non-payments

How frequent are VAT inspections?

You can’t tell the frequency of VAT inspections by looking at the date on a letter from the Revenue, but that’s not because they’re doing it secretly. It’s because, as far as we know, there is no way to tell how often HMRC will conduct random inspections.

HMRC conducts random inspections to determine whether you comply with your tax obligations. If they suspect you may not be compliant, they will send an inspector out to check your business’s compliance.

The agency may show up unannounced or send you an email/letter before the inspections.

How long does the inspection last?

Most VAT inspection times can take as long as they need to.

Some factors will affect the time it takes for your VAT inspection. If you don’t have a company VAT number, this can be a factor in how long it takes. The more complex your business is and the larger it is, the longer it will take them to do their work.

What will happen at the end of the investigation?

At the end of the investigation, HMRC will send you a report via email or letter.

The report will indicate:

  • Tips on improving your VAT record keeping
  • Information on any mistakes and how to correct the VAT errors
  • Underpayment or overpayment of VAT
  • Penalties and interests that must be paid

VAT penalties

Here are the penalties that might be imposed on your business after the checks:

  • If found to have any mistakes in your books, you will be fined up to 100% of any overstated or understated amount.
  • If it is found that you failed to register for VAT at the correct time, you can be fined between 5% to 15% depending on how late you were.
  • If you submit a paper return rather than online, you will be charged £100 to £400, depending on your business revenue.

What if you don’t agree with the assessment or penalties?

If you don’t agree with the assessment or penalties, don’t worry! HMRC has a process for that.

After the check, you have 30 days to request a statutory review by another HMRC officer who is not connected to the initial inspection. This review will be carried out by an independent assessor who will decide whether there was an error in the original assessment. If unsatisfied with their decision, you can submit a VAT appeal to the First-tier Tribunal within 30 days.

Many people believe that they’re done for when they’re accused of tax evasion. But if you’ve been charged with VAT evasion, there’s hope!

You can get in touch with VAT investigation specialist solicitors London. They will help you fight the charges and get your business back on track.


Now you know! VAT inspection is a process that is often overlooked, but it’s a crucial part of your business. If you’re unsure what it is or how to do it, don’t worry—Kangs Solicitors have covered you!


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