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Compliance visits

Every now and again, HM Revenue & Customs like to surprise their business clients by dropping in on them to see how they’ve been getting on. These are known as compliance visits and are usually fairly short run-of-the-mill affairs. Most businesses can expect to get one at least every 4-5 years.

There are 2 main types of compliance visit you need to concern yourself with – VAT inspections and PAYE inspections. A new business can expect a VAT inspection within the first 2-3 years. They are generally just to make sure that you are aware of the VAT regulations and have a proper accounting system in place for keeping track of your inputs and outputs. PAYE inspections are generally less frequent but tend to be more problematical in that there are a higher number of potential pitfalls in the area of expenses and benefits. Most employers manage to run a payroll system without too many problems but it is surprising how many are unaware of potential PAYE liabilities on staff expenses. Some of them don’t even bother to do P11Ds or obtain a dispensation.

As ever, preparation is the key to dealing with compliance visits and it is advisable to spend some time reviewing your accounting records once a visit has been announced and try to identify any problem areas. If you do find anything wrong, it is best to be upfront and disclose it yourself rather than hoping they won’t find it. If you do get tripped up on anything, you may well then be facing interest and penalties so you will need to negotiate a settlement.

The other people who may want to pay you a visit are your local Health and Safety inspectors. If one of these comes to your premises and finds anything wrong, you could face enforcement action or even prosecution in the most serious cases. If you employ more than 4 people and have not yet got a written health and safety policy, we strongly advise you to get one now and carry out a risk assessment. You should also visit the Health and Safety Executive or Business Link websites to find out what your responsibilities are.

At Acumen, we can help you prepare for a compliance visit, negotiate with the tax authorities on your behalf and, better still, make sure you don’t do anything wrong in the first place! Please give us a call if you would like to discuss any of these issues.

Tax Tips
Problem areas
Discuss the visit with your accountant beforehand and make sure you are aware of any potential banana skins.
Accounting records
Make sure your accounting records are all up to date and can be produced when the inspector asks for them.
Staff interviews
Brief your staff and make sure they are accompanied if the inspector wants to interview them.
Supervision
Don’t let the inspector wander around the workplace alone and give them a suitable place to work.
Settlements
Don’t negotiate any settlements with the inspector during the visit – do this later once you have taken advice.
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