VAT Investigations

Expert Representation in HMRC VAT Enquiries and Disputes

At Holland & Co Chartered Accountants, we have extensive experience in representing businesses facing VAT investigations and compliance checks from HM Revenue & Customs (HMRC). VAT is one of the most complex and heavily regulated areas of UK taxation — and mistakes, even when unintentional, can easily trigger an enquiry or lead to costly penalties.

If HMRC has contacted you regarding a VAT irregularity or has opened a full VAT investigation, it is essential to seek professional representation immediately. Our team of experienced tax accountants and investigation specialists will guide you through every stage of the process, ensuring that your position is protected and the matter is resolved as efficiently and favourably as possible.

Understanding VAT Investigations

A VAT investigation is not a routine compliance exercise — it occurs when HMRC suspects that your business has made errors, omissions, or deliberate misstatements in VAT returns. These investigations can range from targeted checks on specific transactions to full-scale enquiries into your company’s entire VAT history.

HMRC may initiate a VAT investigation for reasons such as:

  • Repeated late VAT submissions or payments.

  • Discrepancies between VAT returns and declared turnover.

  • Unusual fluctuations in input or output tax claims.

  • Incorrect application of VAT rates or exemptions.

  • Failure to comply with the Domestic Reverse Charge (DRC) in the construction sector.

  • Involvement in missing trader (carousel) fraud or supply chain irregularities.

  • Random or risk-based selection as part of HMRC’s compliance campaigns.

Once triggered, HMRC can review up to four years of records in routine cases — or twenty years where deliberate inaccuracies are alleged.

Types of VAT Investigations

VAT investigations generally fall into one of the following categories:

1. Routine VAT Compliance Checks

These are standard reviews where HMRC examines VAT records to ensure compliance. While less serious, they can escalate quickly if discrepancies are found.

2. Civil VAT Investigations

Conducted under Code of Practice 9 (COP9) or Code of Practice 8 (COP8) when HMRC suspects deliberate wrongdoing or serious tax avoidance. These are complex and require expert management to prevent escalation.

3. Criminal VAT Investigations

In rare cases, where HMRC believes fraud has occurred (e.g. false invoicing, fake claims, or fraudulent repayment requests), the matter may be referred to the Fraud Investigation Service (FIS) for criminal prosecution.

Our role is to ensure that your business receives fair treatment, that all communication with HMRC is properly managed, and that any issues are resolved with minimal financial and reputational damage.

How We Can Help During a VAT Investigation

Our VAT specialists provide a comprehensive service covering every stage of an HMRC investigation. We will:

  • Review and analyse HMRC’s letter or notice to understand the scope and grounds for the investigation.

  • Conduct a full internal review of your VAT returns, invoices, and accounting systems to identify potential issues before HMRC does.

  • Liaise directly with HMRC on your behalf — managing correspondence, attending meetings, and ensuring that all information is presented clearly and correctly.

  • Negotiate settlements and penalty reductions, leveraging our experience in dispute resolution and disclosure processes.

  • Advise on voluntary disclosures, if errors are identified, to reduce penalties and prevent escalation.

  • Ensure compliance with Making Tax Digital (MTD) and digital record-keeping requirements.

Our goal is to protect your business, minimise penalties, and secure a fair and timely resolution.

Common VAT Errors That Trigger HMRC Attention

VAT rules are notoriously complex, and even experienced businesses can make honest mistakes. Common problem areas include:

  • Incorrect VAT rate application (e.g. standard, reduced, or zero-rated supplies).

  • Claiming input VAT on non-business or disallowed expenses.

  • Misinterpreting place of supply rules for international transactions.

  • Incorrect VAT treatment of deposits, discounts, or partial exemptions.

  • Failure to apply the Domestic Reverse Charge for construction or cross-border services.

  • Not registering or deregistering for VAT at the correct threshold.

  • Errors arising from incompatible or outdated bookkeeping systems.

We use leading cloud software such as KashFlow, Xero, and QuickBooks to ensure accuracy, automate VAT reporting, and maintain compliance with MTD requirements — significantly reducing the risk of investigation.

Potential Consequences of a VAT Investigation

The outcome of a VAT investigation can vary widely depending on the nature of the errors and whether HMRC believes they were careless, deliberate, or fraudulent. Possible consequences include:

  • Repayment of under-declared VAT.

  • Interest charges on unpaid tax.

  • Penalties of up to 100% of the VAT due (or 200% for offshore matters).

  • Public naming under HMRC’s “deliberate defaulters” regime.

  • In serious cases, criminal prosecution.

By engaging professional support early, you can often mitigate or eliminate penalties and demonstrate cooperation and reasonable care — two key factors HMRC considers when determining penalty levels.

Preventing Future VAT Problems

Once an investigation is resolved, our focus shifts to ensuring long-term compliance and prevention of future issues. We can help you:

  • Strengthen internal accounting and VAT control systems.

  • Implement automated VAT reporting through KashFlow or other digital tools.

  • Conduct periodic VAT health checks to identify and correct errors early.

  • Provide ongoing advice on changes to VAT legislation and HMRC guidance.

  • Offer training to your finance staff on VAT compliance and reporting.

This proactive approach ensures your business remains compliant and audit-ready at all times.

Why Choose Holland & Co for VAT Investigations

With over 39 years of experience, Holland & Co Chartered Accountants has successfully represented businesses of all sizes in HMRC VAT disputes. Our approach combines technical expertise, negotiation skill, and practical understanding of HMRC’s processes.

We are committed to:

  • Protecting your interests throughout the investigation.

  • Minimising tax, penalties, and stress.

  • Restoring your compliance position quickly and effectively.

  • Providing clear communication and ongoing support.

Our reputation for professionalism and discretion ensures that your case is handled with the utmost care and confidentiality.

Contact Us

If you have received a VAT enquiry or compliance check notice, do not respond before seeking professional advice. Early intervention can make a decisive difference in the outcome.

Contact us today for a confidential consultation with our VAT investigation specialists at Holland & Co Chartered Accountants. We will review your situation, liaise directly with HMRC, and guide you through the process to achieve a fair and efficient resolution.