This reflects a situation where the risk wasn’t obvious at first, but the consequences were real.
What mattered wasn’t speed or certainty, it was how the issue was recognised and handled once it came into view.
I joined the business as Global Lead, Customs Governance and Strategic Compliance.
Early on, while reviewing UK VAT processes, I started looking more closely at export documentation. Nothing appeared overtly wrong at first, but the evidence supporting VAT zero-rating was inconsistent.
Exports had been processed correctly in practice. Goods left the UK and reached customers, but the documentation required under HMRC VAT Notice 703 was incomplete. Over time, that gap had become normalised.
When we stepped back and quantified the exposure across several years, the potential liability was approximately £2.4 million.
When routine becomes risk
This wasn’t a case of deliberate avoidance or corner-cutting. It was a slow drift. Processes worked. Shipments moved. Revenue flowed.
But VAT zero-rating is evidential, not contextual. Intent doesn’t matter. Proof does.
Without the required evidence, the position wouldn’t have held up under scrutiny. The real risk wasn’t just financial, it was regulatory credibility.
Choosing how to respond
At that point, the question wasn’t how to minimise attention. It was how to restore control.
Rather than waiting for the issue to surface through audit, we approached HMRC directly. A voluntary disclosure was made, setting out the position as it stood. Where evidence was missing, provisional VAT payments were made to protect the business and remove penalty exposure.
That created space to deal with the problem properly.
Reconstructing what had been lost
The next phase was slow and unglamorous. Working with freight forwarders, carriers, archive teams, and customers, we rebuilt export audit trails going back several years. In many cases, the missing evidence still existed, it just hadn’t been linked or retained systematically.
Where proof was recovered, VAT was reclaimed. Where it couldn’t be, the position was corrected. At the same time, it became clear that addressing the past wasn’t enough.
Putting structure where judgment had been assumed
The export compliance framework was rewritten so that evidence requirements were embedded directly into operations, not reviewed after the fact.
Document control was systemised.
Checks were moved describing upstream.
Teams outside compliance were trained to understand what mattered and why.
Compliance stopped being a back-office function and became part of how shipments were authorised.
After the fact
When HMRC reviewed the disclosure, there were no findings. Every transaction had been accounted for, corrected, or disclosed.
The original exposure was neutralised. Some VAT was recovered. Penalties were avoided. More importantly, the organisation ended up with a system that could tolerate growth, change, and acquisition without relying on memory or assumption.
Reflection
The issue itself wasn’t unusual.
What mattered was how easily a small, reasonable assumption had compounded into a material risk over time.
That pattern shows up repeatedly in complex organisations, not because people are careless, but because systems drift quietly when no one is explicitly responsible for noticing.
The work, in the end, wasn’t about fixing VAT, it was about restoring alignment before complexity made that impossible.
Links
HMRC VAT Notice 703 https://www.gov.uk/guidance/vat-on-goods-exported-from-the-uk-notice-703
Ryan Hill 
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