Why is HMRC checking my VAT return?

A VAT compliance check simply means HMRC wants to satisfy itself that a return is correct before it treats the figures as final. This doesn't mean it thinks you've done anything wrong.

Checks are triggered in several ways: automated risk-scoring that compares your return against your trading history and sector norms, a specific anomaly such as an unusually large repayment claim, or data HMRC holds from other sources that doesn't quite match what you've declared.

Some checks are essentially random, forming part of HMRC's wider assurance programme to keep the VAT system credible, rather than a response to anything specific you've done.

Schedule 36 Finance Act 2008 gives HMRC the statutory power to request information and documents reasonably required to check your tax position, and to inspect business premises in some circumstances.

If the check reveals an error, HMRC can raise an assessment under section 73 VATA 1994 for the VAT it believes is due, with interest running from the date the correct VAT should have been paid.

There's no separate 'trigger' legislation as such; the power to check is broad, but HMRC's own guidance sets out the categories of risk that tend to prompt a look, and officers must still act reasonably in what they ask for.

A compliance check letter usually names a specific return period and lists the records HMRC wants to see. Read it carefully rather than assuming it covers everything you've ever filed.

Directors sometimes panic that a check signals fraud suspicion. In the large majority of cases it doesn't; it's simply due diligence on a return that stood out for a specific, identifiable reason.

How you respond matters more than why the check started. Clear, organised evidence that ties back to your VAT return figures resolves most checks quickly and without further action.

There's no fee for being checked. The real cost is time: pulling together invoices, contracts and reconciliations, and your accountant's time reviewing them before they go to HMRC.

If the check uncovers a genuine error, you'll face the underpaid VAT plus interest, and potentially a penalty under Schedule 24 Finance Act 2007 depending on how the error arose.

Growth plan clients get free tax investigation insurance included, which covers professional fees if a routine check develops into something more involved. See /fees for what's included.

Don't assume a check means trouble and go quiet; non-response is what turns a routine check into a drawn-out one.

Don't send more than HMRC has asked for. Extra documents can raise new questions rather than closing the check faster.

Don't try to handle a check alone if the request is broad or the figures are complicated; get your accountant involved from the first letter, not after things escalate.

Simple checks, for example verifying one or two invoices behind a repayment claim, can close within a few weeks once you've supplied the evidence.

Checks that span several VAT periods, or that uncover discrepancies needing further explanation, can run for months while HMRC works through the detail with you.

You can ask HMRC for a timescale and, if a check drags on without progress, use the complaints process to push for a decision.