Communicating with HMRC

Communicating with HMRC can be intimidating for anyone, especially when it involves an inspection or a query. At Crowe, we speak to HMRC numerous times a day for various reasons. We have tested and refined several methods to improve communication with HMRC. We cover our dos and don’ts below to help improve your experience when communicating with HMRC for VAT.

Dos:

• Understand what HMRC or you are aiming to achieve.
  Whether you are requesting a repayment or HMRC is reviewing your recent VAT return, understanding what each party aims to achieve is the first step in ensuring that correspondence is clear, concise, and aligned with the desired outcome.
• Cooperate with HMRC.
  Cooperating with HMRC will lead to much smoother processes, transforming the tone from a confrontation to a constructive dialogue. Working collaboratively with – rather than opposing – HMRC is advantageous for various reasons, but most importantly, behaviour is often one of the factors considered when HMRC assesses penalties to impose on a taxpayer.
• Seek advice if you’re unsure.
  Whether it concerns the VAT treatment of your sales, further queries after your registration application, or even a general VAT return review, if you are unsure about what your response should be, seek advice. Providing the wrong information to HMRC can be costly, both in terms of administration and finances. Although this can be revisited, corrected, and resolved, it is best practice to ensure that your position remains consistent and substantiated, to avoid confusion and keep discussions focused on achieving the desired outcome.

Don’ts:

• Assume you are “in the wrong”.
  HMRC contacts businesses for various reasons. If HMRC reviews your VAT returns for a period, it does not necessarily mean that your calculations are wrong. We have seen many cases where HMRC reviews VAT returns simply to better understand a business’s sector.
• Be afraid to correct misunderstandings.
  Every business is unique; however, there will be many similarities across sectors.  HMRC’s views will be partly based on their knowledge and experience of the sector, which means general assumptions can be made.  Don’t be afraid to correct instances where HMRC misinterprets a situation or arrangement, as this can result in the conversation diverting from the intended outcome, and may result in HMRC’s view being different from what it should be.
• Answer questions you are not being asked.
  One of the worst mistakes we see when communicating with HMRC is businesses offering more information than is asked for or needed, for various reasons. Giving too much information can confuse HMRC, divert from the main goal, and put your business at risk of further investigation. Therefore, when speaking to HMRC, keep your responses clear and directly related to what HMRC has asked.

If you have an ongoing VAT issue with HMRC or simply want to understand how to prepare your business for future dealings with HMRC, please don’t hesitate to contact your usual Crowe contact.