Key takeaways
- HMRC checks VAT returns by letter, phone, video call or visit; most checks are routine and many end with no change.
- HMRC normally gives at least seven days' notice of an inspection visit, although unannounced visits are possible.
- HMRC can usually assess VAT for four years back, extended to six years for careless errors and 20 years for deliberate ones.
- Penalties for inaccurate returns depend on behaviour and are reduced substantially if you tell HMRC about errors and help put them right.
- Good records, regular reconciliations and a clear audit trail are the best preparation.
A VAT inspection, which HMRC calls a compliance check, is a review of whether your VAT returns are right. It can be as small as a letter asking about one invoice or as large as a multi-day visit covering several years. Most are routine. Knowing what HMRC can ask for, and how long it can look back, takes much of the stress out of the process.
Why HMRC checks VAT returns
There is no single trigger, but common reasons include:
- Repayment returns, especially a first return or an unusually large claim
- Figures that look out of line with previous periods or similar businesses
- Sector risk: construction, hospitality, cash businesses, online sellers and second-hand dealers are checked more often
- Information from elsewhere, such as a customer’s or supplier’s records, bank data or a tip-off
- New registrations, where HMRC wants to confirm the business is genuine before paying repayments
- Random selection
A check does not mean HMRC suspects wrongdoing. Pre-repayment checks on new businesses are common and usually quick if the paperwork is in order.
How checks are carried out
HMRC may contact you or your accountant by letter, phone, video call or in person. A typical check runs like this:
- Opening letter. HMRC explains what it is checking, which periods, and what it wants to see. It usually encloses a factsheet explaining your rights.
- Records and questions. You send the records requested or HMRC arranges a visit to see them. Officers may ask about how the business works, who your customers are and how you record transactions.
- Findings. HMRC tells you whether it thinks anything is wrong, explains its calculations and invites you to comment.
- Closure. HMRC either closes the check with no change, or issues an assessment for VAT due, with penalties and interest where they apply.
Visits
For a visit to inspect business premises, assets and documents, HMRC normally gives at least seven days’ notice and agrees a time. An authorised officer can approve an unannounced visit where notice would undermine the check, but this is unusual. HMRC cannot force entry to inspect records during a normal compliance visit, and it can only inspect a private home used for business with the occupier’s agreement or tribunal approval.
Information notices
If you do not provide information voluntarily, HMRC can issue a formal information notice requiring documents or information that are reasonably required to check your tax position. Penalties apply for failing to comply. You can appeal against some notices, for example where you think the request is unreasonable.
How far back HMRC can go
| Situation | Normal time limit for an assessment |
|---|---|
| Innocent error, or HMRC’s own mistake | 4 years |
| Careless error | 6 years |
| Deliberate error | 20 years |
This is why VAT records must be kept for six years. HMRC must also raise an assessment within one year of having enough evidence to do so, within these overall limits.
Penalties for errors
If HMRC finds that a return was wrong because of an error, the penalty depends on why it happened:
| Behaviour | Maximum penalty | Minimum with unprompted disclosure | Minimum with prompted disclosure |
|---|---|---|---|
| Reasonable care taken | 0% | 0% | 0% |
| Careless | 30% | 0% | 15% |
| Deliberate but not concealed | 70% | 20% | 35% |
| Deliberate and concealed | 100% | 30% | 50% |
Percentages apply to the extra VAT due. A disclosure is unprompted if you tell HMRC before you have reason to believe it is about to find the error, and prompted if you tell it during a check. Within each range the penalty is reduced for telling HMRC, helping it work out the correct figure and giving access to records. HMRC can also suspend a penalty for careless errors if you agree conditions that improve your record keeping.
Late payment interest runs on any extra VAT from the date it should have been paid.
How to prepare
- Keep records up to date. Reconcile your bank and VAT control account every period, not just at the year end.
- Keep the evidence behind reclaims. Valid VAT invoices, import VAT certificates, export evidence and any partial exemption workings.
- Be ready to explain unusual entries. A note on each return of anything unusual, such as a large capital purchase, saves time later.
- Involve your accountant early. They can deal with HMRC for you, attend a visit and help check the figures before you send them.
- Check whether you have fee protection insurance. Many accountants offer cover for the professional costs of dealing with an enquiry.
If HMRC finds an error
- Check HMRC’s calculations; mistakes are not unusual and it is reasonable to challenge them.
- If you agree, pay the VAT or ask about a Time to Pay arrangement if you cannot pay in full.
- If you disagree with a decision, you can ask for an internal review or appeal to the First-tier Tribunal, normally within 30 days of the decision letter.
If you find an error yourself, you can often correct it on your next return; see how to complete a VAT return. Larger errors are reported to HMRC directly. For a broader look at HMRC checks across all taxes, see our guide to HMRC compliance checks.
Frequently asked questions
Can HMRC turn up for a VAT inspection without notice?
HMRC normally gives at least seven days’ notice. Unannounced inspections need approval from an authorised officer and are used where notice would prejudice the check.
How many years can HMRC go back on VAT?
Four years for most errors, six years where the error was careless and 20 years where it was deliberate.
Will I be penalised for every mistake HMRC finds?
No. There is no penalty for an error made despite taking reasonable care. Penalties apply to careless and deliberate errors, and are reduced if you disclose and cooperate.
Can my accountant deal with a VAT check for me?
Yes. With your authorisation HMRC will deal with your accountant or tax adviser, who can respond to letters and attend visits with you.
Sources
Rates, thresholds and rules in this guide were checked against HMRC and GOV.UK guidance in October 2026. Tax rules change, so check the current position on GOV.UK or with a qualified adviser before acting. This guide is general information, not personal advice.