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Are You VAT Compliant?

Are You VAT Compliant?

HMRC published new guidance in September 2023 on VAT compliance controls that is aimed at helping businesses establish if they have sufficient controls in their systems and processes to be VAT compliant and to help the business identify risks and strategies to de-risk the business.

The guidance is multi-part with sections setting out good practice, risk management, control design considerations, documentation for internal controls and assessing controls for VAT and notes that the compliance controls in a small business will differ from the level required in large businesses.

The guidance also has in-depth notes on control points where VAT accounting errors can stem from including staff, outsourced services, IT infrastructure, use of AI and data.

Examples of issues and opportunities we have noted for clients during VAT reviews and VAT workshops include:

  • We identified that a national service provider that used self-billing to recover VAT had poor procedures in place with a 15% error rate where the supplier had an invalid VAT number leading to input VAT being claimed in error of around £35K per quarter VAT. We assisted the client in putting controls in place going forward and correcting the position for historic supplies-in the majority of cases the supplier had changed its VAT number for example by VAT grouping and therefore could provide a valid VAT number.
  • Our team identified that a client providing services to customers outside the UK had declared UK VAT on supplies that were outside the scope of VAT leading to a significant back claim for over-declared VAT.
  • We also identified an issue created by a client trading in USD, converting this to Euros and then posting to the VAT return in GBP resulting in a different amount of VAT being claimed on purchase invoices to the amount it had been charged by the supplier.


If you are unsure if you have a robust and compliant VAT accounting system in place, it would be worth contacting one of our team for an initial discussion as we can provide VAT compliance reviews and/or VAT training to assist your business in avoiding needless VAT costs. For professional support, contact our team today on 0161 477 6600, or complete our online contact form, and we will arrange a consultation at your convenience.