HMRC Risk Mitigation

When a company has complex VAT affairs, the risk of HMRC scrutiny increases. Errors in VAT treatment, governance or reporting can result in significant assessments, penalties and reputational damage. But many organisations are not aware of VAT risks until HMRC initiates an enquiry.

A proactive review of organisational VAT risks will allow you to identify early any areas that might attract HMRC’s attention. The Proactive Consultancy Group’s VAT risk mitigation specialists can make practical recommendations and support their implementation to strengthen compliance and reduce exposure.

This structured review by specialist VAT risk experts is designed to identify, evaluate and reduce VAT-related issues that may lead to HMRC enquiries, disputes, penalties or assessments.

In undertaking a review of your VAT treatments, the aim is to:

• Minimise VAT exposure
• Improve governance of compliance
• Reduce the likelihood of HMRC intervention
• Strengthen supporting documentation and audit readiness
• Create greater confidence in VAT positions

What the Risk Mitigation Service Covers

Our risk mitigation service includes:

• VAT Risk Review
• HMRC Readiness Assessments
• Compliance Risk Management
• Transaction Risk Reviews
• Governance and Control Enhancement

VAT Risk Review

This diagnostic review will identify high-risk VAT areas, including historic VAT treatment and assessment of complex or unusual transactions. Our tax specialist will also evaluate your company’s VAT governance frameworks.

HMRC Readiness Assessments

Our HMRC readiness assessment comprises a review of documentation and record keeping, along with an evaluation of internal controls and procedures. We will also assess evidence supporting VAT positions to prepare for potential HMRC enquiries.

Compliance Risk Management

The process of compliance risk management involves a comprehensive VAT return risk review. It includes an assessment of processes and controls and error identification and correction. It also includes monitoring of recurring risk areas.

Transaction Risk Reviews

Our HMRC risk mitigation service can be targeted to transaction risk reviews for specific commercial activities, such as:

• Property transactions
• Corporate restructures
• Acquisitions and disposals
• International trading arrangements
• Major capital expenditure projects

Governance and Control Enhancement

Our consultants can assess your company’s VAT policies and procedures, internal reporting frameworks, approval and decision-making controls and risk-management processes through a risk mitigation lens.

Common HMRC Risk Areas for VAT

VAT is a major compliance focus for HMRC, and the latest guidance and commentary from professionals indicate some likely risk areas including VAT recovery claims, property VAT, international VAT and group structures.

VAT Recovery Claims

Companies making VAT recovery claims are at enhanced risk from HMRC, as are companies challenging decisions relating to partial exemption, particularly where supporting evidence is weak. Input tax recovery errors can also increase risk.

Property VAT

HMRC is paying particular attention to how high-value organisations manage option to tax issues, property transaction treatment and development and investment structures.

International VAT

Companies that work across multiple jurisdictions have exposure risks in cross-border transactions, import and export processes and overseas registration obligations.

Group Structures

Complex organisations may attract HMRC’s attention in relation to VAT grouping arrangements, intercompany transactions and shared service models.

Sector-specific HMRC Risks

Some sectors, like healthcare, are exposed to risk of HMRC scrutiny in exempt and partially exempt supplies. Mixed-use activities are another focus, as are complex supply chains and industry-specific VAT treatments.

The Proactive Consultancy Group’s HMRC risk mitigation service works on an end-to-end basis, from risk identification to implementation and defence. The process consists of:

1. Assessment

The objective of our initial assessment is to understand the organisation's VAT profile, operating structure and exposure to HMRC risk. Our VAT specialists will review business activities and assess VAT registrations and reporting to identify key areas of complexity and understand compliance history to draw up an initial risk profile describing potential HMRC exposure.

2. Case Validation

To confirm whether material VAT risks exist and determine the potential impact, our consultants will carry out a detailed technical review. They will assess your company’s documentation and evidence to quantify risk exposure and evaluate the likelihood of an HMRC challenge. This will result in a prioritised risk assessment and recommended action plan.

3. Engagement With No Upfront Cost

At this stage, we can implement a risk reduction programme with minimal financial commitment in the form of an agreed strategy for risk mitigation and compliance enhancement. There are no upfront fees when you engage The Proactive Consultancy Group so you can be assured that our activities, as described in our transparent engagement structure with clearly defined objectives and scope, are commercially aligned with the best outcome for your organisation.

4. Delivery

Working with your tax department, our consultant will support your company in reducing identified risks and strengthening readiness for an HMRC enquiry. This might include:

• Technical remediation work
• Process and control improvements
• Documentation enhancement
• Staff guidance and support

Our consultants will also carry out HMRC engagement where required.

The outcome of this service will be reduced VAT exposure and stronger compliance framework for improved VAT governance.

5. Fee Only on Success

We work on a fee only on success basis and our invoice will be aligned with the successful reduction of VAT risk and exposure. This ensures a shared focus on measurable value and a commercially aligned approach.

The benefits to your company of engaging The Proactive Consultancy Group’s end-to-end risk mitigation service are:

• Reduced HMRC exposure to minimise the likelihood of enquiry, assessment or challenge.
• Stronger compliance through improved VAT processes, controls and reporting accuracy.
• Improved audit readiness to ensure evidence and documentation can withstand HMRC scrutiny.
• Enhanced Governance to build a VAT control environment that is suitable for complex organisations.
• Greater Confidence to make strategic decisions knowing VAT risks have been properly assessed.

Speak to a VAT risk specialist today.

Contact us

Our HMRC risk mitigation service is best suited to high-value organisations that are seeking proactive risk management rather than reactive problem-solving. We can be of most assistance to:

• Businesses with significant VAT liabilities or recoveries
• Organisations operating in complex regulatory environments
• Companies with multiple entities, registrations or jurisdictions
• Businesses undertaking significant transactions or restructuring projects

We have extensive experience working within these sectors:

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These are some common situations where a risk mitigation assessment may add value:

• Before an HMRC enquiry
• Before a corporate transaction
• Before entering new markets
• After identifying potential VAT errors
• Ahead of external audit or due diligence reviews

This service is also of use during periods of organisational transformation, such as following rapid business growth or during group restructuring, or after systems or process changes.