So two months after starting my experience and after one VAT return we are now due an inspection, which is great.
Any how I reran the vat report on sage for the period just gone and there is a difference of £60 on the purchase side due to a few amendments I made whilst tidying up the suppliers a couple of weeks ago.
They owed us around £3000 for the period and now they owe us £60 less.
Question is when they come in and have a look (I shall point this error out to him/her ) will we be likely to get fined?
I think the worst that will happen is they could charge interest on the underpayment, but it is such a small amount it would amount to next to nothing. I'm sure most vat inspections pull up more than £60 differences and if you didn't point it out they probably wouldn't have found it! You can put errors of upto £10,000 of VAT right the following quarter in any case.
Over the years I have been through a few VAT inspections and found the inspectors to be friendly and helpful.
I don't think you will be fined, it is a small error that you would put onto the next return. You are not trying to hide anything and can explain your differences.
I think the worst that will happen is they could charge interest on the underpayment, but it is such a small amount it would amount to next to nothing. I'm sure most vat inspections pull up more than £60 differences and if you didn't point it out they probably wouldn't have found it! You can put errors of upto £10,000 of VAT right the following quarter in any case.
What has prompted the inspection Steve?
According to the chap that informed us of the inspection it is due to being a new company (4 months old) and the fact that it is a butchers so the vat usually owe a lot to the company. He stated he just wanted to make sure everything was being done properly
Over the years I have been through a few VAT inspections and found the inspectors to be friendly and helpful.
I don't think you will be fined, it is a small error that you would put onto the next return. You are not trying to hide anything and can explain your differences.
Let us know how you get on.
Regards
It's not till May 5th or 6th so i'll let you know how it went.
Ironically I was just about to give them a call concerning the difference and how I deal with it, now I don't have to.
I've been advised to ply them with tea and biscuits and big smiles.
companies always get a VAT inspection within their first 18 months. Sure that one or two may have slipped through the net but that's the general policy.
As has been said above the meetings are usually quite constructive.
And no being stingy with the biccies. Mcvities hob nobs and / or chocolate digestives seem to be the antidote to grumpy VAT inspectors.
Also, make sure that you've got invoices TO THE COMPANY!!!!! for absolutely everything and where multiple items are paid into the bank at the same time make sure that you have a fully descriptive note of what all of the items were.
You'll be fine though as I know your a bit of a perfectionist anyway.
Keep us in the loop,
All the best,
Shaun
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
companies always get a VAT inspection within their first 18 months. Sure that one or two may have slipped through the net but that's the general policy.
As has been said above the meetings are usually quite constructive.
And no being stingy with the biccies. Mcvities hob nobs and / or chocolate digestives seem to be the antidote to grumpy VAT inspectors.
Also, make sure that you've got invoices TO THE COMPANY!!!!! for absolutely everything and where multiple items are paid into the bank at the same time make sure that you have a fully descriptive note of what all of the items were.
You'll be fine though as I know your a bit of a perfectionist anyway.
Keep us in the loop,
All the best,
Shaun
Cheers, all invoices are present and correct (but i'll double check just to be sure). As for biccies well it just so happens that on their deli counter they have homemade chocolate caramels that should be ok.
Thanks for all your input folks and I shall let you know how it goes.
for an unlimited supply of top notch biccies have you thought of a career as a VAT inspector?
Hi Rob,
I thought that the initial inspection was still a priority but I have heard that the clients of certain accountants get visits more than others so maybe they're just being more selective now on the ones that get through the net and if the accountant is recognised as a good one then they're less likely to get a visit.
Just a guess there with absolutely no evidence to back it up whatsoever so could be completely wrong.
Talk later,
Shaun.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Usually anything unusual triggers a VAT inspection. For example a company which has always paid the VATman suddenly has a rebate or vice versa. One of my charities used to fluctuate between refund and payment of around £5K either way then, because of a major refurbishment for which funding had been gained they had a huge refund - VAT visit.
I've just been accepted as a MIAB (on my very old qualifications and experience) so it's bye bye to HMRC for me. Hopefully I'll be able to upgrade to FIAB when I get the result of the L3 Diploma I took in March with them.
are you going to do the level 4 International Financial Reporting paper? I really fancy that one as up until now everything I've done has been UK GAAP which of course disappears in 2012.
You've got me worried on the VAT now as after twenty years of paying out I actually got a £114 refund this quarter... Oh dear! Free inspection with every refund!
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
My next foray is the SAGE L3 which is still sat in the box on the shelf above the desktop.
I've also just signed up for a free train the trainer course in financial awareness. Thought this might bring in a fair bit of work because I believe one of the government priorities was for the training of young people in financial awareness so teachers will need to learn how to do it. Most of them are financially illiterate, I know when I worked in college I spent half my time stopping the English teacher making huge financial mistakes.
Usually anything unusual triggers a VAT inspection. For example a company which has always paid the VATman suddenly has a rebate or vice versa. One of my charities used to fluctuate between refund and payment of around £5K either way then, because of a major refurbishment for which funding had been gained they had a huge refund - VAT visit.
I'm assuming it's because they owe us and they want to make sure that this is the case, I hope so anyways.
No problems, I filled in the form (which you can download from the website) sent copies of my very very old certificates (1960s) also stuck in a CV, gave two referees who could comment on my competence got an email saying words to the effect that I had been accepted at member level, told me how much to pay, paid. Very painless process.
Well as it turns out the inspection went very well no problems no fines no money owing either way and he was happy with the system.
He did point out various ways to claim even more VAT back and let us know that if we do a return once a manth then we will most likely avoid another inspection as there is a threshold and we are likely to breach it every time with quarterly returns.
I bet your pleased that's done with now - it's always a little scary when HMRC come nosing round, but most of the time they are quite positive and helpful. I've had a couple of people in from HMRC over the years with my day job VAT and Gift Aid. I was pleased I had everything in order - the satisfaction of knowing that your doing everything right (even when you know deep down that you are) is always nice.
Well done again - hopefully you won't get another one for a while now.
Thanks Bill yep a sound nights sleep is in order, could of been awkward if it hadn't gone well as I've invited the owners over for my littluns birthday on Sunday.
Thanks Anne-Marie you do feel a little warm glow inside when you have been assured your doing things right, I've only been doing it a few months so as far as I knew I could of been doing it totally wrong (however the owners did secure against that by getting an accountant friend in just to make sure)
no I'm up north East Lancs, and it's raining and I still need to get out and vote
