Role of HMRC

HM Revenue and Customs (HMRC)

A government body that requires organisations to comply with tax regulations, including VAT, and monitors their compliance.

Role of HMRC in VAT Monitoring

HMRC ensures organisations keep adequate accounting records, submit VAT Returns, and pay any VAT due on time.

HMRC Control Visits

Inspections conducted by HMRC to review an organisation's VAT records at any time.

HMRC Inspection Notice Period

HMRC typically provides seven business days' notice before conducting an inspection of a business.

Indirect Tax Collection

A system where tax is not paid directly to HMRC by the consumer but is collected by the seller and paid to HMRC on the consumer's behalf.

HMRC Registration for Employers

HMRC requires anyone starting to employ staff or using subcontractors to register as an employer before the first payday.

Real Time Information (RTI)

The online process required by HMRC for electronic transmission of employee details and payment information.

PAYE (Pay As You Earn)

The method used by HMRC to collect

Income Tax directly from employed workers.

HMRC Tax Code Adjustments

Adjustments used by HMRC to manage under or over-payments of PAYE from previous years without requiring separate payments.

Full Payment Submission (FPS)

A report submitted to HMRC on or before payday to inform them of payments and deductions made for employees.

Employer Payment Summary (EPS)

A report submitted by the 19th of the following month to claim back amounts from HMRC, such as maternity or paternity pay.

HMRC Payroll Penalties

Fines imposed by HMRC for late or inaccurate payroll submissions or payments.

HMRC Assessment of Tax

An estimate issued by HMRC detailing what they believe a business owes in VAT if a return is not filed on time.

Voluntary Disclosure to HMRC

A written report submitted to HMRC when a business discovers a VAT error that is above the reporting threshold or deliberate.

HMRC Interest on Late Payments

Interest charged by HMRC on late VAT payments, calculated at the Bank of England base rate plus 4%.

Making Tax Digital (MTD)

HMRC requirements that nearly all businesses submit VAT Returns using compatible software.

HMRC 'De Minimis' Limit

A test introduced by HMRC in 2010 allowing partially exempt companies to reclaim all input tax if it is less than $625 per month.

VAT Notices

One of the sources of VAT legislation issued directly by HMRC to provide guidance and rules.

HMRC Record Retention Rule

HMRC requires payroll records to be kept for three years after the end of the tax year and general VAT records for six years.

Communicating with HMRC

Businesses can clarify issues with HMRC via the website, email, telephone, or post to ensure correct guidance is followed.