UK VAT compliance review

Understanding your VAT position

VAT is an area of ever increasing risk and ensuring your business’ VAT processes and procedures are compliant can be complex. HMRC enquiries are on the rise and the risk of getting things wrong can be costly. A review of your business’ VAT position can guide you in the right direction. Such reviews can not only manage risk but may also identify opportunities and efficiencies.

One such case in point arose within a recent VAT compliance review on analysing supply chains and the VAT treatment of supplies received, we identified approximately £90,000 of additional recoverable VAT. This advice also allowed the client to update its processes and procedures in respect of the recovery of VAT on future costs, leading to an approximate quarterly VAT saving of £15,000.

Our dedicated VAT team offer three levels of compliance review. Further information in respect of the services offered for each option is set out over leaf.

Our compliance reviews

• Option 1: A high-level desk top review.
• Option 2: Detailed review (excluding consideration of Making Tax Digital (“MTD”)).
• Option 3: Detailed review (including consideration MTD).

Option 1 – High-level desk top review 

Ideal for businesses with low level VAT complexity that may not have reviewed their VAT processes and procedures in a number of years and would like to identify any key areas of risk or opportunity. 

Services included: 

• High-level review of the business’ UK VAT return processes and procedures, including consideration of compliance with MTD. 
• Provision of a high-level VAT questionnaire and review of responses. 
• A 1 – 2 hour meeting hosted by Grant Thornton’s Indirect Tax team. 
• Follow up recommendations of any issues which may require further analysis. 

Option 2 – Detailed review (excluding MTD) 

A more detailed review is recommended for businesses with more complex VAT affairs(e.g. businesses with a high volume of supplies with different VAT rates, partially exempt businesses etc) or where a sale is envisaged in the next 3 – 5 years. 

Services included: 

• Provision of a detailed, tailored questionnaire on the VAT treatment of sales and purchases. 
• Review of any documented VAT compliance procedures and processes. 
• A review of one VAT return and back up schedules. 
• An initial meeting to discuss the responses to the questionnaire and the VAT compliance procedures. 

Option 3 – Detailed review (including MTD) 

Option 3 includes all of the services offered in Option 2 and additionally includes a review of the business’ “digital journey” requirements for MTD. This Option may be preferable where the business has implemented minimal changes in order to meet its MTD requirements. 

Services included: 

Option 2 services and additional consideration of MTD requirements including: 

• Any UK VAT issues which may result in either an underpayment or overpayment of VAT; 
• Implications of the issues identified; 
• The actions we recommend are undertaken in order to address these issues; 
• Should we identify any potential non-UK VAT/ sales tax issues, we will incorporate an appropriate recommendation for each potential issue; and 
• Consideration of the current VAT compliance processes and commentary on what steps may be taken to ensure these are as robust and efficient as possible.