Overview

Receiving a message from HM Revenue & Customs (HMRC) can feel stressful — but VAT compliance checks are a normal part of doing business, especially in eCommerce.

In the UK, HMRC generally uses the term compliance check rather than tax audit.

This guide explains what to expect and how to handle the process confidently.

👀 First Things First: What Is a VAT Compliance Check?

A VAT compliance check is a review by HMRC to confirm that your reported transactions, VAT returns and supporting records are accurate and complete.

HMRC may check specific transactions, individual VAT periods or broader aspects of your VAT affairs.

Not every request for information means that a formal compliance check has begun.

The authorities generally want to establish whether the correct amount of VAT has been declared and paid.

📩 Step 1: Let Us Know

If you receive any communication from HMRC concerning your VAT registration, please forward it to us as soon as possible.

👉 We can review the request and guide you on the next steps.

💡 Important:

Handling and responding to an HMRC compliance check is a separate service. If you would like hellotax to actively manage the process on your behalf, this can be arranged as an additional paid service, subject to the required authorisations.

If you prefer, you can also handle the process yourself. We can still provide initial guidance on the appropriate next steps.

Before sharing information, make sure the communication is genuine. If you are uncertain, verify it using official HMRC contact details.

⏳ Step 2: Keep an Eye on Deadlines

HMRC may specify a deadline for providing documents, records or explanations.

The response period depends on the nature of the compliance check and the type of request.

👉 Missing a deadline can lead to:

• Further requests or formal information notices
• Penalties where statutory requirements are not met
• Tax assessments based on the information available to HMRC

✔ Check the deadline in the HMRC notification and act promptly.

If you need more time, contact HMRC or your authorised representative before the deadline to discuss whether an extension is possible.

📊 Step 3: What Information Might Be Requested?

HMRC may request documents showing your business activities and VAT transactions.

These can include:

• Sales data from marketplaces and webshops
• Purchase invoices
• VAT invoices issued to customers
• Bank statements
• Payment provider reports (e.g. PayPal, Stripe)
• Shipping and transport documents
• Import and export documentation
• Stock records (e.g. Amazon FBA, UK warehouses)
• UK VAT returns and supporting accounting records
• Postponed VAT accounting statements, where applicable
• Digital records maintained under Making Tax Digital (MTD)

The documents required will depend on the scope of the compliance check.

🔄 Step 4: Understand What They're Checking

For businesses selling physical goods, HMRC may examine the full transaction flow:

👉 Purchase → Transport → Storage → Sale → Payment

They want to see that:

• Purchases and sales are accurately recorded
• Imports and exports are properly documented
• Warehouse and stock information is consistent
• UK VAT has been applied correctly
• Transactions are reflected accurately in UK VAT returns
• Online marketplace VAT responsibilities have been handled correctly

For businesses supplying digital services, the review may focus on customer location, place-of-supply rules and the applicable VAT treatment.

🔍 Step 5: Make Sure Everything Matches

Consistency is key.

Check that:

• Sales reports match your VAT returns
• Payments can be reconciled with recorded sales
• Stock movements align with your transaction data
• Import and export records support the reported VAT treatment
• Input VAT claims are supported by appropriate documentation
• Relevant digital accounting records are complete and consistent

👉 Any gaps or mismatches may lead to further questions from HMRC.

🗂️ Step 6: Keep Things Clear and Organised

To make the process smoother:

• Submit complete and readable documents
• Organise files by VAT period and document type
• Provide short explanations where needed
• Keep copies of all documents submitted
• Use the communication channel specified by HMRC
• Keep a record of correspondence and agreed deadlines

🤝 How hellotax Can Support You

You have two options:

✔ Handle It Yourself

You can manage the compliance check directly, using your own accountant or tax advisor where necessary.

hellotax can provide initial guidance and help you identify relevant VAT reporting information available through our services.

⭐ Let Us Handle It for You

We can arrange compliance check assistance as an additional paid service, subject to the agreed scope and any necessary HMRC authorisations.

Depending on the service agreed, this may include:

• Reviewing relevant VAT and transaction data
• Preparing responses and supporting documentation
• Coordinating communication with HMRC

The precise scope of support will be confirmed before the service begins.

✅ Key Takeaway

A VAT compliance check is about transparency, accuracy and traceability.

You will be better prepared when:

• Your records are complete
• Your data is consistent
• You respond within the required deadlines

👉 If you've received a compliance check notification, contact hellotax promptly so we can help you understand the next steps.