Why did this happen?

If you have a UK VAT number and you've received a notification from HM Revenue & Customs (HMRC), it can feel worrying — but VAT compliance checks are a normal part of the UK tax system.

HMRC generally refers to these reviews as VAT compliance checks, rather than tax audits.

This article explains:

• why compliance checks happen
• what HMRC is usually checking
• what you should do next
• how hellotax can support you — and what we cannot do

⚠️ Important: This article is for guidance only and is not tax or legal advice. In some situations, you may need to speak with your accountant or a qualified UK tax professional.

Why have I been selected for a compliance check?

Being selected for a compliance check does not automatically mean you have done something wrong.

HMRC may review your VAT affairs for several reasons.

✔ Routine or risk-based checks

HMRC carries out compliance checks to ensure businesses are declaring and paying the correct amount of VAT.

E-commerce businesses, including overseas sellers registered for UK VAT, may be selected for review.

✔ Data mismatches

HMRC may identify differences between:

• your VAT returns and marketplace reports (Amazon, eBay, etc.)
• sales reported by online marketplaces and your declared UK turnover
• import VAT records and VAT amounts reclaimed
• VAT returns and supporting accounting records
• reported VAT refunds and underlying transactions

These differences do not necessarily indicate an error, but they may result in requests for clarification.

✔ Late filings or payments

Repeated late VAT returns, outstanding VAT liabilities or frequent corrections to previously submitted returns may attract additional attention.

✔ Rapid growth or unusual activity

Significant changes, such as increased turnover, new UK warehouse locations, changes in supply chains or unusually large VAT repayment claims, may lead to further checks.

✔ Missing or incomplete records

If previous requests for information or documentation have not been answered, HMRC may take further compliance action.

What is HMRC checking?

HMRC may want to confirm that:

• your reported UK sales and VAT amounts are accurate
• the correct UK VAT rates have been applied
• sales through online marketplaces have been treated correctly
• the correct VAT treatment has been applied to imports, exports and international transactions
• invoices and accounting records meet UK VAT requirements
• input VAT claims are supported by valid documentation
• import VAT has been correctly accounted for, including postponed VAT accounting where applicable
• VAT returns are consistent with underlying transaction records
• applicable Making Tax Digital (MTD) record-keeping requirements have been met

For businesses making qualifying supplies involving Northern Ireland, HMRC may also review the relevant EU goods VAT reporting requirements.

📌 HMRC will usually explain which VAT periods or transactions are being checked. The scope depends on the nature of the compliance check and may be expanded where legally permitted.

What should I do if I receive a compliance check notification?

1. Read the notification carefully. Check whether HMRC is requesting information, opening a formal compliance check or contacting you about a specific VAT discrepancy.
2. Check the response deadline. HMRC may require documents or explanations within a specified period.
3. Verify the communication. If you are unsure whether the notification is genuine, use official HMRC contact details rather than relying on links or telephone numbers in a suspicious message.
4. Contact hellotax promptly. Send us the notification and accompanying documents so we can identify whether it relates to VAT services we provide.
5. Gather supporting records. These may include invoices, marketplace reports, transaction exports, customs documentation, postponed VAT accounting statements and VAT payment confirmations.
6. Seek professional advice where necessary. Formal disputes, complex VAT issues or proposed assessments may require a qualified UK tax advisor or authorised representative.

⚠️ Do not ignore an HMRC notification, even if you believe your VAT returns were filed correctly.

How hellotax can support you

Where the request relates to VAT services provided by hellotax, we can help by:

• Reviewing the notification to identify the relevant VAT periods and reporting requirements
• Providing copies of VAT returns and reports prepared through our services
• Helping identify discrepancies between submitted returns and available transaction data
• Explaining the VAT reporting information held in your hellotax account
• Coordinating with the relevant accounting team where additional clarification is needed

What hellotax cannot do

Unless expressly agreed as part of a separate service, hellotax does not provide:

• Legal representation in tax disputes
• Formal tax investigation or audit defence
• Representation before HMRC beyond an agreed authorisation or service scope
• Guarantees that a compliance check will be closed without adjustments or penalties

Additional accounting or legal support may be required depending on the nature of the investigation.

What happens after the compliance check?

The outcome depends on the information reviewed and HMRC's findings.

HMRC may:

• Close the compliance check without changes
• Request additional documents or explanations
• Identify corrections required to previously submitted VAT returns
• Issue an assessment for additional VAT
• Charge interest or penalties where applicable
• Continue with further enquiries or enforcement action

If you disagree with HMRC's findings, you may have the right to request a statutory review or appeal, depending on the decision and applicable deadlines.

Key Takeaways

If you receive a notification from HMRC:

• Do not assume that a compliance check means you have made an error
• Verify the notification and check the response deadline
• Keep accurate VAT, marketplace and transaction records
• Contact hellotax promptly if the request concerns services we provide
• Seek qualified professional advice for formal investigations or disputes

The most important thing is to respond promptly and provide accurate information. Ignoring an official request can make a manageable issue more serious.