HMRC is ramping up expectations around VAT compliance. Any failure to follow the new guidance could result in significant penalties. And we’re finding a lot of businesses don’t even realise they’re non-compliant.
The full announcement is a hefty read, split into ten parts, but we’ve summarised the key points below.
What’s changing? And why does it matter to you?
- HMRC are upping the ante on VAT compliance, directing that robust controls and risk management processes are in place.
- They’re placing expectations on you to proactively identify and manage risk.
- They expect you to review all relevant wider guidance particular to your industry. So, this document is just a starting point.
- They expect controls and processes to extend to any function within your business that has a touchpoint on VAT compliance – this isn’t just a “finance thing.”
- Insufficient controls might lead to “careless” errors, attracting penalties of 30% of the error. If HMRC finds the error, penalties could soar to 100%, and they’re becoming more vocal about their power to go after individuals in the worst cases.
How can CP’s Indirect Tax team help?
We’re offering a free chat to hear your current position on your existing VAT compliance processes and controls, and the compliance policies your teams adopt.
We can then help you identify weaknesses and gaps, supporting you with the design and implementation of additional controls and processes to ensure full compliance.
Plus, if you invest in such a review and improve controls, but HMRC still spot an error, the evidence of your efforts is deemed “good governance”, playing a huge part in penalty mitigation – often down to zero.
We then have a variety of ways to keep you compliant moving forward:
- Data Analytics: We’ll use data analytics to run tests and controls before you submit each VAT return. This could improve your working capital and help you reclaim VAT, boosting your cash position.
- Automation: We can build and automate the controls and processes that you need, saving staff time and ensuring compliance.
- Outsourcing: We can offer full outsourcing of your VAT compliance needs, aligning with the new guidelines and ‘Making Tax Digital’ rules – another area you may not yet be on top of.
So, if you’d like to find out more about what’s changed, whether your business is affected and the actions we’d suggest, get in touch.
