It’s another scorcher of a day today and Adam and I are breathing a very big sigh of relief this afternoon. The sunny month of June, for us, started with an email from HMRC that every business hopes never to receive – a routine VAT Compliance check (AKA inspection!)
You would think that, as an owner of accountancy firm I wouldn’t have been in the slightest bit worried about this – after all, we should be the ones that get it right – right?
That is true, but even so I’ve had a few sleepless nights over the past week – can you imagine how embarrassing it would be if we had got it wrong????
The inspection was for another one of our businesses which Adam uses to sell prestige second hand cars and more recently for our motorhome hire business, Heycampers. (www.heycampers.co.uk)
They selected four VAT returns dating back to 2017 and randomly chose a whole list of invoices and bills that they wanted copies of.
I think what triggered the inspection was a very large refund this VAT quarter on the purchase on 2 brand new motorhomes. I am sure that anything out of the ordinary like this is enough attract the attention of HMRC and sure enough they wanted to know exactly why we were asking for a refund on this scale.
Importantly, they told us at the outset that they would hold back the repayment of the VAT until they were satisfied that everything was in order. Had this enquiry dragged on and on for months then it could have caused a cash flow problem.
What surprised me was the very short timescales we were given to provide a LOT of information and how disruptive this was to our business. We literally had to drop everything to answer the officer’s questions and were only give a couple of days deadline each time we were sent a request for more information.
Luckily it was easy to provide copy receipts and invoices as we had stored everything on quick books using Dext (was receipt bank) so it was just a case of sending copies of everything to HMRC. To give credit where it is due, HMRC processed the information really quickly and came back with further questions within a few hours each time.
Within 10 days the whole enquiry was done and dusted and our VAT refund processed. The whole process was actually quite straightforward, but also scary and we are very relieved to have passed their checks without any further investigation. I think if anything had been missing or not quite right, they would have delved much deeper into our transactions and the whole process could easily have dragged on for months.
I have been saying for months now that I expect the number of HMRC inspections to increase but when we received the dreaded email I was as worried as anyone would be. I can’t imagine how much of our valuable and precious time would have been taken up if we hadn’t had everything in good order and they had launched a full investigation – thankfully we don’t have to worry about that now.
So, what’s the moral of this story? Well there isn’t one really – maybe when we ask you for a receipt you might think “thank goodness Lilley and co are so thorough and look after me, if I get a VAT inspection my books will be squeaky clean” instead of rolling your eyes and thinking “not those flipping annoying accountants wanting receipts again”
Have a great day everyone and enjoy the sunshine while it lasts.