Case Study Accounting Compliance Client Business sector: SME
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Proactive Handling of VAT Underpayment Issue with HMRC

After being engaged by a new client to help with the preparation of their annual accounts we uncovered a significant unknown VAT liability. The business owner did not know about the issue that resulted from a transposition error in a VAT return two years previously. The previous accountant had not informed the client of the error. There was a real danger of fines and penalties being applied by HMRC.


The requirement was to  communicate proactively with HMRC; to reassure them that the matter was being handled swiftly and professionally and minimise the chances of penalties being imposed.

What we did

Langricks immediately informed the business owner and managed communication with HMRC. We were open about the source of the error, how and when it had been uncovered, and steps taken to prevent re-occurrence. As a result we agreed a suspended penalty and the client paid the underpaid VAT.

The case highlights the fundamental importance of understanding the detail of your balance sheet and working with an accountant who will highlight anomalies and areas of concern.


  • Managing a positive and open dialogue with HMRC builds trust.

  • Penalties are less likely to be applied if HMRC sees evidence that you are dealing with issues swiftly and professionally.


The client successfully made it through the end of the suspension period and no fines or penalties were paid. The issue was settled amicably and the client restored their good standing with HMRC.

Services Provided

  • Compliance
  • Accounting
  • HMRC Communication