How to Prepare for a VAT Enquiry

Why It Matters

Businesses should expect increased scrutiny and more frequent VAT enquiries, raising the risk of blocked recoveries and costly disputes unless controls, record-keeping and communication channels are strengthened. Preparing now reduces exposure to assessments, penalties and operational disruption.

Summary

HMRC is stepping up VAT compliance activity—recruiting officers, using technology and AI, and opening more inquiries aimed at closing the VAT gap. Firms are seeing tougher challenges to repayment claims and greater scrutiny of governance, processes and controls, particularly under initiatives like Project Snowball targeting large corporates. HMRC’s GfC 8 guidance on VAT governance is being positioned as best practice for preparation, even though it isn’t law. Tax advisers warn businesses to review documentation, controls and supplier positions to avoid denied recoveries and downstream commercial disputes.

Original Description

HMRC is stepping up its compliance activities when it comes to VAT. In this episode, we explain what businesses can do to prepare for a VAT enquiry and we explore how HMRC and the government could better support businesses in meeting their VAT obligations.

Links 

ICAEW: VAT compliance controls: new guidance from HMRC - https://www.icaew.com/insights/tax-news/2025/feb-2025/vat-compliance-controls-new-guidance-from-hmrc

ICAEW: Making sure a tax return is correct and complete - https://www.icaew.com/insights/podcast/the-tax-track/making-sure-a-tax-return-is-correct-and-complete

ICAEW: Budget: Changes made to VAT rules and processes (e-invoicing) - https://www.icaew.com/insights/tax-news/2025/nov-2025/budget-changes-made-to-vat-rules-and-processes#4

ICAEW: How to fix VAT - https://www.icaew.com/technical/tax/vat/how-to-fix-vat

Host

Stephen Relf, Tax Technical Manager, ICAEW

Guests

Rob Janering, VAT partner, Crowe UK LLP

Simon Atkins, Partner, RSM UK

Producer

Ed Adams

Episode recorded: 21 May 2026

Episode published: 10 June 2026