VAT errors remain one of the most common compliance issues for UK businesses. Even small mistakes can lead to HMRC enquiries, penalties, or missed opportunities to recover VAT correctly.
A VAT health check can help identify risks, improve processes, and ensure your business remains compliant.
Here are five signs it may be time to review your VAT position.
Frequent or large VAT repayment claims
Businesses that regularly submit VAT repayment returns, or experience sudden increases in repayments, are more likely to attract HMRC attention.
A VAT health check can help ensure:
- VAT calculations are accurate
- Supporting documentation is in place
- Claims can be supported in the event of a compliance check
Manual reconciliations and accounting errors
Manual reconciliations and data entry increase the risk of VAT errors, including incorrect VAT rates, duplicate transactions, and omissions.
Reviewing your VAT processes can help:
- Identify weaknesses in existing systems
- Improve accuracy and efficiency
- Reduce the risk of assessments and penalties
Fluctuating turnover, VAT liabilities or refunds
As businesses grow or change, VAT obligations can also shift.
You may be approaching the VAT registration threshold, or your turnover may have fallen below it.
A VAT health check can confirm:
- Whether your registration status remains appropriate
- If VAT is being accounted for correctly
- That reporting obligations are being met
Changes to products, markets, or supply chains (including overseas trading)
Expanding into new markets or introducing new products and services can create additional VAT complexity.
This is particularly relevant when trading overseas, where factors such as incoterms, import VAT treatment (for example, C79 certificates vs Postponed VAT Accounting), and appropriate supporting documentation become increasingly important to manage compliance and cash flow effectively.
A review can help ensure the correct treatment is applied across all business activities.
Preparing for growth or sale
Periods of change often increase the importance of VAT compliance.
This may include:
- Business expansion
- Investment activity
- A sale or restructure
A VAT health check can help identify issues early and provide reassurance that VAT processes are operating effectively.
What does a VAT review typically include?
A VAT health check typically includes:
- Reviewing VAT returns and calculations
- Checking invoices and record keeping
- Assessing VAT treatment on key transactions
- Identifying risks or errors
- Highlighting opportunities to recover overpaid VAT
- Recommending process improvements where required
Next steps
If any of these points apply to your business, it may be worth reviewing your VAT position.
Taking a proactive approach can help reduce compliance risks, improve efficiency, and ensure any issues are identified before they become costly.
Get in touch
If you would like support reviewing your VAT processes or understanding your VAT obligations, our team can help. Get in touch with Lorna Hammond (lorna.hammond@pmm.co.uk) or Andrew Kirkaldy (andrew.kirkaldy@pmm.co.uk)
