Farming and rural businesses are being advised to take note of new HMRC guidelines for VAT compliance in order to minimise the risk of future penalties.
The new guidance outlines expectations and suggested good practice in respect of VAT accounting and VAT compliance processes.
They are aimed at helping businesses to establish an appropriate tax control framework and to eliminate the possibilities of errors as much as possible.
Chartered accountant Saffery is advising farmers and rural businesses to take note of and act on these guidelines, where relevant.
Failure to do so may increase the risk of future investigation by the authorities, the company warns.
There could also be an increased likelihood of penalties where errors are identified and the guidelines not followed.
HMRC's guidelines are extensive and touch upon many aspects and elements of a business and its control points.
They cover, for example, sales and purchase processes and transactions; accounting adjustments including credit notes, reverse charges, bad debt relief; employee expenses; accounting systems; VAT reporting; and correcting errors.
One key recommendation in the guidelines is for the business to have a well-documented VAT compliance process through which key risk areas are successfully managed.
The guidelines are intended to assist businesses and reduce the risk of VAT errors, interest, and penalties.
John Butterfield, director of VAT at Saffery says the new guidelines ensure that VAT reporting is accurate and that the risk of errors is minimised.
"When reviewing client’s VAT we find that controls may not be a strong as they should be," he explains.
"Sometimes just taking a step back and considering if the figures make sense and considering what controls are in place, or not, is a valuable exercise.
"Any errors which do occur which indicate that the appropriate controls were not in place as recommended, then HMRC is perhaps more likely to levy penalties which would otherwise not have been the case.”
