What a health check examines
A VAT health check is a defined review of records, processes and selected transactions to identify potential weaknesses and actions. Its scope may include registration, invoice controls, transaction treatment, input-tax recovery and reconciliations between accounting records and submitted returns.
Agree the periods, entities, transaction types and selection approach before work begins. A limited review should not be described as checking every transaction or certifying complete compliance.
Distinguish it from an FTA tax audit
An adviser performs the health check under an engagement with the business. An FTA tax audit is an authority process under the tax framework. The health check does not replace that process, prevent an authority review or guarantee that no penalties will arise.
The value is a clearer understanding of issues and a practical plan for addressing them. Management should know what was tested and what remained outside the agreed scope.
Prepare the review records
- Registration information and relevant FTA correspondence.
- Filed returns and supporting working papers.
- General ledger, VAT accounts and reconciliations.
- Sales and purchase invoices, credit notes and import records.
- Contracts and transaction flows for unusual arrangements.
- Existing policies, system settings and reviewer approvals.
Reconcile the main schedules before testing begins. Missing evidence should appear in the findings rather than be treated as proof that a transaction was correctly handled.
Turn findings into action
A useful findings register states the issue, affected period, evidence, possible exposure and recommended next step. Separate a confirmed error from an item that requires more facts or technical advice.
Assign an owner and target date for each action. Where historical returns may be affected, assess the appropriate correction procedure and current requirements. A process recommendation for future invoices does not automatically resolve a past filing issue.
When should a review be considered?
A review can be useful after system changes, business expansion, new cross-border arrangements or repeated reconciliation problems. The frequency should reflect the business's risks and changes rather than a universal annual rule.
Is a favourable review a compliance certificate?
No. Read the report's scope, limitations and findings. It is evidence of the agreed work, not a promise about every transaction or a future authority decision.
Sources and further reading
Official references checked during the 24 October 2026 refresh. Application details and requirements can change; use the current source for the relevant entity and period.
