HMRC Compliance Checks

So, what are HMRC Compliance Checks?

HMRC Compliance Checks are to make sure a specific tax return or claim is correct and/or to check that payments are for the right amount and are made on time. Some checks are done on a random basis as to discourage evasion. A compliance check can be anything from a 5-minute phone call to a major investigation and everything in-between.

HMRC seem to have returned to targeting cash businesses, including, but not limited to: -

• • Cafes
• • Plumbers
• • Electricians
• • Restaurants
• • Takeaways
• • Plasterers

So, what can a compliance check involve? 

Let’s take the restaurant as an example, let’s say they have just filed their quarterly VAT return and it was flagged by HMRC, because the turnover is lower than normally reported.

A method HMRC could choose to investigate the restaurant is by having officers pose as couples and purchase test meals. Whilst they are there, they will count the number of meals. Make general observations regarding the number of staff, how orders are taken and payments are made. They may have a few officers attend over a few days to provide a view of the trade.

When HMRC come and do their compliance check (notice of inspection) on your records they will check to see if the test meal has been declared, check to see other orders recorded and/or rung through the till.