A friend had a call today From Customs And Excise to say they would be visiting to do A Vat Inspection , hes never experinced one of these before , ? the person that called said they would visit from 9.30 - 3pm to look at his books etc. he has nothing to hide but is unsure how these things work.
Hes going to have his accountant check over his books etc and come in during the visit , as my friend is not very experinced in these matters as he pays his accountant to do his books and vat returns etc..
Hes only been in business around 18months so he seems to think its maybe more of a general visit to ensure things are been done correctly and more of a general check up in case things are been processed incorrectly....is this a fairly standard thing for new Ltd companys ?
I had one about 2 weeks ago, a very friendly bloke from the VAT office came along, had a look at my stuff, which was all a mess, said okay, impressed on me the importance of getting things on time, and chatted about normal stuff.
If his accountant is going to charge him, and the books and accounts really are simple, I'd may be thing about not having him in, it really was a simple little chat.
Jim thank you for that i will pass that onto my friend , i must say i have had a little look on the net via Google by simply typing in Vat Inspection , which pulled up some useful information , which pretty much said its a regular will happen in the first 3 years type thing...which is good as theres a lot of spooking and scare stories around that could send a shiver down a business mans back at the mere thought of this kind of thing...but it all sounds pretty routine stuff....which is good.
the Vat man does seem to be considered a Bogey Man.....
Seems to be. I had one 3 years after starting up as self employed.
Very nice lady. Went through my records and returns, pointed out my mistakes, and I seem to recall that they actually owed me a few hundred quid - result!!
My apologies for the lateness of this reply; I've been busy.
VAT inspections were great -- a free and detailed audit. After thirty odd years they now seem to be a thing of the past for small traders such as myself. An inspector armed with a briefcase would roll up at about ten am. I'd show him where all the files were in the office, how the coffee machine worked, and leave him to it. He'd buzz me now and then to offer comments about mysterious things called 'over-decks' and 'under-decks'. Now and then I'd get something along the lines of: "I've finished 1985's quarters and you owe us GBP100". An hour later: "That's
1986 out of the way and we owe you GBP50."
The day would progress like that. At the end a small adjustment payment was usually required.
The last inspection was about seven years ago. A delightful lady. Dylan and Thomas were kittens then and thought she was just wonderful. She managed to do all her work with them having garrisoned her lap. In addition to my showing her where everything was, the cats showed her which filing cabinet drawer contained the packet of Brekkies.
At one point she asked me a number of questions and marked some sort paper. I guess it was a form of examination. Wonder of wonders, she asked me if VAT presented me with any problems. Overseas royalties from EU member states was always a problem [1]. She caused me great joy by saying that I needn't complete EU sales sheets, always a headache because I could never get VAT/IVA numbers out of EU customers.
Her last question was to ask me if the moggies always frequented my office to which I said I found their presence very therapeutic even if they did kip on the fax machine and send occasional touch-dial calls to my Tokyo agent. She understood and, to my astonishment, she wrote me a note on C & E VAT letter heading giving me the okay to claim back the input VAT on their food and VET bills! She signed it and stamped it!
I made her a parting present of one of my paperbacks. I had to complete a form saying that it was a trade sample gift, give the value, and sign it.
I've always found VAT inspectors to be the most reasonable people one could wish to deal with. Even the one who once unearthed a serious error in the early 1980s was understanding. What I owed was a lot for me at the time so he offered to accept a cheque for one quarter of the amount owing there and then, and the other three-quarters spread over three post-dated cheques. A gentleman!
[1] A recent directive (by phone} was that EU sales of rights are no longer to be treated as exports. To be an export it has to be something tangible. Exported rights don't fit the bill. But I expect this will change. The subject has been a switch back of rulings and counter-rulings for two decades.
As per previous posters, I had an inspection in 1999 (done by a trainee
supervisor so extremely thorough) and they found a material error from a couple of year's previously which meant I owed them several hundred quid.
As it was clearly a c*ck-up caused by my vanity (this was in the days when I optimistically thought I could run a Ltd Co with mininal professional accountancy support), they were absolutely fine about it. Wanted a cheque there and then mind, but no fines etc.
As per previous posters, I had an inspection in 1999 (done by a trainee
supervisor so extremely thorough) and they found a material error from a couple of years previously which meant I owed them several hundred quid.
As it was clearly a c*ck-up caused by my vanity (this was in the days when I optimistically thought I could run a Ltd Co with mininal professional accountancy support), they were absolutely fine about it. Wanted a cheque there and then mind, but no fines etc.
The selling of rights to a business outside the UK should qualify for zero-rating. You need to have evidence that the item is being sold to a business, usually the business's VAT number for EU based businesses, shown on the invoice. This is covered by Article 9(2)(e) of the 6th Council Directive (77/388/EEC), which in UK terms is Paragraph 1 of Schedule 5 of the Value Added Tax Act 1994.
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