The short answer: who should lead on a restaurant group VAT demand
Lead with your accountant and add a lawyer only when the letter forces it. The overwhelming majority of VAT demands sent to restaurant groups are about numbers: a return HMRC thinks is wrong, a VAT treatment it disagrees with, or an assessment it has raised because the records look incomplete. That work is reconciliation, evidence and a written response, which is accountancy, not litigation.
The instinct when a demand arrives for tens of thousands of pounds across two or three sites is to reach for a solicitor. Sometimes that instinct is right, but paying for legal representation to answer what is really a bookkeeping dispute wastes money and slows the response down. The honest split is simple: an accountant proves what the right VAT figure is, and a solicitor is there for when HMRC stops arguing about the figure and starts alleging you got it wrong on purpose. Our VAT returns and Making Tax Digital team handles the first job, and will tell you plainly when the second one has arrived.
If you run a multi-site group and want the shortcut, speak to a specialist hospitality accountant who has answered a VAT demand before. They will read the letter, tell you whether it is a figures dispute or something heavier, and only involve a solicitor if the wording genuinely calls for one.
What kind of VAT demand have you actually received?
Before you decide who answers it, work out what the letter is, because the word "demand" covers several very different things. In our experience three arrive most often at restaurant groups, and each is handled differently.
The first is a compliance check, where HMRC asks to see records and returns and queries specific entries. A compliance check is an information and evidence exercise, and it is squarely accountant territory: you are proving your figures, not defending a crime. The second is a VAT assessment, where HMRC raises its own estimate of what it thinks you owe because a return is missing or the records look wrong. An assessment is made to the best of HMRC's judgement, and you answer it with better figures and evidence rather than argument. The third, and the one that changes everything, is a letter that alleges deliberate or dishonest behaviour, hints at fraud, or mentions a penalty near the top of the range. That is where a tax solicitor earns their place.
For a restaurant group the dispute underneath is often the same handful of issues: the VAT split between standard-rated meals eaten in and cold food taken away, the treatment of delivery-platform commissions and service, deposits taken for bookings and events, and whether every site's takings have been captured. None of that is exotic. It is detailed, and it rewards an accountant who knows how hospitality VAT actually behaves rather than a general adviser meeting it for the first time. LOYALS is a King's Cross firm of accountants and business consultants that files VAT for London restaurant groups every quarter, so these are familiar arguments to win on evidence.
Which parts need an accountant, and which need a tax solicitor?
Split the letter question by question rather than handing the whole thing to one adviser. Most demands are a mix, and the cheapest route is usually to let your accountant answer the financial questions and reserve legal help for the parts that are genuinely about conduct or law.
In practice the division falls out like this. Reconciling the returns against the till and bank, proving the eat-in and takeaway split, assembling the invoices and explaining the VAT treatment are accountancy tasks, and so is drafting the written response and asking for a review. Where the letter alleges you acted deliberately, disputes a point of law, threatens a personal liability notice against a director, or raises the prospect of a civil evasion penalty or prosecution, a tax solicitor should be alongside the accountant.
There is one practical point that often decides it, and it is rarely explained. Legal advice privilege, the protection that stops HMRC demanding to see the advice you took, applies to advice from a solicitor or barrister. It does not extend to advice from an accountant. So if the risk is that HMRC will one day want to see what your adviser told you, for example where deliberate behaviour or fraud is in play, the privileged advice has to come through a lawyer. For an ordinary figures dispute that risk does not arise, and an accountant is both cheaper and faster.
LOYALS keeps your accountant in the lead on the numbers and brings in a tax solicitor only when the letter crosses into conduct, so you are not paying legal rates to reconcile a till. That is the position we would take for most restaurant groups, and it changes only when HMRC alleges you acted deliberately.
How big can the penalty be, and why does that change who you call?
The size of the possible penalty, and the behaviour HMRC attaches to it, is the single best guide to whether you need legal help. Penalties for an inaccurate return are set as a percentage of the extra VAT, and the percentage depends entirely on how HMRC rates your behaviour.
A careless error, the kind that comes from a genuine mistake or weak records, carries a penalty of up to 30 percent of the extra VAT. A deliberate error, where HMRC says you knew the return was wrong, runs up to 70 percent. A deliberate and concealed error, where you also hid it, reaches up to 100 percent. Those bands, and the way disclosure reduces them, are set out in HMRC's penalties overview, current as at October 2026.
Read the bands and the adviser question answers itself. If the behaviour in play is careless, this is an accountant's job: you reduce the penalty by correcting the figures, telling HMRC what went wrong and helping them check it, which can pull an unprompted careless penalty down close to nothing. Once HMRC uses the word deliberate, the percentages jump and the exposure becomes personal, and that is the point where legal advice and its privilege are worth paying for. The bar chart is the quiet reason the earlier flowchart turns on a single question: deliberate or not.
What are the deadlines, and what happens if you miss them?
You usually have 30 days, and on a VAT demand the clock is easy to misread. If you disagree with an appealable decision, HMRC will offer a review, and for VAT and the other indirect taxes the 30 days run from the date of that review offer rather than from the original decision letter. Within the window you can accept the review, which is handled by an HMRC officer not involved in the original decision, or appeal straight to the independent tax tribunal. You can also ask HMRC for more time inside the same 30 days. The routes and the timing are set out in HMRC's guidance on disagreeing with a tax decision.
Miss the deadline and you are not automatically finished, but you are on the back foot: a late appeal needs a reasonable excuse or the tribunal's permission, and meanwhile the assessed VAT is payable and interest runs. If paying the demand in full while you dispute it would strain cash across the group, that is a conversation to have with HMRC early rather than late, because a time to pay arrangement is far easier to agree before the debt is overdue.
One more timing point worth knowing. A VAT assessment normally has to be made within four years of the end of the relevant VAT period, but where VAT has been lost because of deliberate behaviour HMRC has up to twenty years, under the time limits in HMRC's compliance handbook. That long reach is another reason the deliberate line matters so much, and why a letter that reaches back years is one to take seriously.
What should your restaurant group do first?
Before you appoint anyone, take four steps that cost nothing and shape everything after.
- Read the letter for the behaviour word. Scan for "deliberate", "fraud", "penalty" and any mention of a review offer or a response date. Those four tell you how serious it is and start the clock.
- Note the deadline in writing. Diary the 30 day date from the review offer, and if it is tight, ask HMRC for more time straight away rather than hoping to make it.
- Get your figures and records together. Pull the VAT returns, the till and card data by site, the delivery-platform statements and the bank, so whoever answers is working from evidence, not memory.
- Authorise your adviser properly. An accountant can only correspond with HMRC once you authorise them as your agent, through agent services or a 64-8 authorisation. Do this early so there is no delay when the response is ready.
Then make the adviser call on the evidence in front of you, not on the fright the envelope gave you. For most restaurant groups the right answer is an accountant leading on the figures, with a solicitor held in reserve for the day HMRC alleges you acted deliberately. LOYALS is a King's Cross firm of accountants and business consultants that answers VAT demands for London hospitality groups, scopes the response, reconciles the numbers and brings in legal help only when the letter truly needs it. If a VAT demand has landed, ask our VAT returns and Making Tax Digital team to scope the response and flag any legal work before the clock runs down.