Letters from HMRC requesting VAT benchmarking and data clarification

In recent weeks HMRC has written specifically to furniture retailers and car repair businesses across the UK, requesting verification of data included within previous VAT returns. Given the high levels of publicity awarded to promoting the risks of tax avoidance and the increasing scrutiny taxpayers are now under, these letters may have caused some concern. This is unnecessary because they are not a notification of a VAT enquiry being opened, but a request that the taxpayer double checks previously reported sales and purchase figures.

The HMRC letter asks taxpayers to do the following:

– Calculate the VAT mark-up ratio. This can be done by calculating gross profit levels as a percentage of purchase costs (input costs) as reported on the VAT return.

– Benchmark the VAT mark-up ratio by comparing it with standard business sector ratios as provided in the letter. If the VAT mark-up ratio falls outside the standard range, figures included within boxes 6 and 7 on future VAT returns should be double checked.

The important point to appreciate is that in writing to taxpayers, HMRC is merely asking for information to be checked. They are not expecting a response to the letters. If you have concerns or would like an independent VAT audit completed on your business, please contact Simon Paterson by emailing sp@rjp.co.uk.

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FAQs

At RJP, we understand that keeping a finger on the pulse of your business's health is crucial. That's why we offer management reporting services—think of them as a regular health check for your company. These insights show you the real-time performance of your business, helping you make informed decisions to nurture and grow your enterprise.

We love seeing your business flourish! Growth and improvement are at the heart of our practical advice. From the ins and outs of everyday operations to big-picture strategic moves, we're here to offer clear, actionable steps that can propel your business forward.

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Absolutely! There's a world of opportunity out there to support your business financially, and we're well-equipped to be your guide. We can help you understand and access HMRC’s tax relief schemes that are relevant to you and your business, making sure you're not missing out on any potential benefits.

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