What is a VAT Health Check?

If you are struggling to calculate your VAT return or are curious whether a different VAT scheme would work better for you, then you may be interested in a VAT health check. In this blog, ARB Accountants will discuss the difference between a VAT scheme and a VAT health check and much more. Keep reading to find out whether a VAT health check could be beneficial to you. 

So, what is a VAT health check? A VAT health check is an external audit of a businesses VAT processes to determine whether the VAT is being calculated correctly or whether there is an alternative VAT programme that is more suited. A VAT health check also helps to recognise any inaccuracies that could lead to financial penalties. 

Keep reading to find out more about VAT health checks including what they are and the benefits of completing them for your businesses. 

What is a VAT Health Check?

A VAT health check is ideal for businesses that have struggled to comply with relevant VAT regulations or don’t think that their internal VAT processes are up-to-date. A VAT health check can help businesses to audit their internal VAT processes and avoid future penalties. Through a detailed analysis of your VAT organisation, a VAT health check helps to recognise where you can make improvements in order to become more compliant as well as saving yourself some time  and money. 

Not only that, a VAT health check may also identify aspects which could improve the efficiency of your VAT processes. For example, currently you may be on a specific VAT scheme that you believe is correct, but a VAT health check may highlight an alternative VAT scheme that would work better for you. It is important to assess this factor because if you are not an expert in this field, you may be on a VAT scheme that is not very financially beneficial for your business. 

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What is Included in a VAT Health Check UK?

A VAT health check can include a variety of aspects in order to audit the efficiency, accuracy and effectiveness of your organisation’s VAT processes. Some of the typical features of a VAT audit includes: 

  • Review of all accounting books 
  • Review of VAT invoicing format 
  • Detailed analysis of VAT input and output calculations 
  • Identification of technical mistakes 
  • Organisation of all tax related documents
  • Implementation of VAt laws and regulations 
  • Identifying VAT risks and concerns 
  • Recommending whether the current VAT programme is appropriate 
  • Suggesting remedies for technical areas of concern

As you can see, VAT health checks can be very thorough, therefore it is important that you have your financial records up to date so that an accurate assessment can be completed.

What is the Difference Between a VAT Scheme and a VAT Health Check? 

VAT schemes are methods used to accurately calculate and report VAT to HMRC, whereas a VAT health check is a service that audits your current VAT scheme. The aim of the VAT health check is to determine whether you are using the most beneficial VAT scheme for your business, and to check the accuracy of your calculations. Both work in tangent with each other and ultimately lead to you providing HMRC with the most accurate VAT return that you can in line with regulatory requirements. 

Benefits of Having a VAT Health Check

VAT health checks are not conducted to recognise the errors you have made within your VAT calculations. Instead, they can provide a variety of benefits to you and your business. To learn more about the benefits of completing a VAT health check, take a look at the table below.

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Flags Up New OpportunitiesOne of the main benefits of completing a VAT health check is that it can help you to identify opportunities to improve your VAT position. For example, if your business has been using the Point of Sale Scheme when calculating the VAT for the goods purchased, you may find that there are some inaccuracies. Unless your business has an electronic till that displays the VAT figure at the point of sale, it can be quite difficult to get an accurate figure. As a result, inconsistencies may be found during the VAT health check which suggest that alternative VAT schemes may work better for you. 
Preempts Errors By completing a VAT health check, you also open your business up to the opportunity to recognise calculation errors before you submit anything to HMRC. This is significant because if you submit financial information that is miscalculated, you risk being fined by HMRC. Therefore, utilising a VAT health check service that is completed by a reputable accountant would be a great benefit for your business. 
Opportunity to Ask QuestionsAnother advantage of completing a VAT health check is that it provides you with the opportunity to ask an expert questions on technical topics that you may not have the most experience in. Whether it is to determine how to do a particular calculation or to query the different types of VAT schemes, having access to an expert in accounting or VAT could help you to broaden your knowledge for when you need to complete your VAT returns in the future. This may also make a difference to the amount of errors made in the future. 
Considers the Impact of External Influences VAT health checks are also beneficial because they take into account external events that may be impacting your VAT position. Examples of this could be Covid-19, Brexit, or when new regulations come into place. All of these factors could contribute to a change in the VAT values and the financial stability of your business. For example, Brexit may have impacted your revenue which would then make it more of a priority to make the most out of the VAT scheme and save money. 

VAT Health Checks at ARB Accountants: 

ARB Accountants offer VAT Health Checks in Essex to help businesses to identify whether they are calculating their VAT returns correctly or whether an alternative VAT scheme would be more beneficial. Our experienced chartered accountants are here to support you with all of your VAT queries and identify any errors you have made to avoid you being fined by HMRC. 

If you are interested in our VAT Health Check  service, don’t hesitate to get in touch today.

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