The development of the new assault rifle began in 1992, during the Croatian War of Independence, when HS Produkt (then called IM Metal) created a bullpup variant of the 7.62 mm Kalashnikov assault rifle. This rifle had a number of flaws, partly caused by limited technological capabilities of IM Metal, but provided a valuable learning experience for the company. A delayed blowback model was tested in the mid-1990s, but the results were still not satisfactory, and it was superseded by a design similar to the M16 rifle. More prototypes followed in 1996, 1999 and 2004.
The development cycle that ultimately led to the current version of the rifle started circa 2003. A new prototype, externally quite similar to the French FAMAS, was publicly announced in 2005 and presented to the Croatian Minister of Defense Berislav Roncevic. However, the difference between the production model that followed and the 2004 prototype is more than 90%.
The VHS-D rifle is 765 mm (30.1 in) long, with a 500 mm (20 in) barrel. the whole rifle body is a monoblock construction made from high-impact polymer. Externally, it strongly resembles the French FAMAS rifle, but both its functioning mechanism and disassembling mode are quite different. The VHS-K is a carbine variant with a shorter 410 mm (16 in) barrel, resulting in overall length of 665 mm (26.2 in).
The early project won the iKA innovation prize for their interesting feature.
Some characteristics of the rifle were not revealed to the public early on and so some misconceptions occurred through the development period: there was word about a sort of recoil buffer in the form of a venting system that recovered part of the gases generated by the shot and pushed it back in a space located behind the bolt; during the cycle, the bolt would thus "bounce" on a sort of "gas cushion" that acted as a buffer, dramatically reducing recoil. That provoked more than a disappointment as the production-stage VHS was reported to operate in a much more conventional manner no longer utilizing this buffering system. According to the project deposited at the European Patent Office however it seems that such voices originated from a misconception of related data, i.e. merging in one two different features: a forced air ventilation system similar to the one in Pecheneg machine gun and a mechanical buffer reductor, similar in conception but not identical to the one used in Ultimax 100, a weapon Croatia used in Croatian War of Independence and still has in its reserve inventory. The same patent states also that Vehesica works neither through direct gas impingement nor through a short or long stroke piston, but through a 'tappet' type of closed gas system much like the FN SCAR. There it was also another precedent design sporting some of said features, but it was rejected after the first real testing, so it is also possible that the "gas cushion" was instead a feature of that former model.
Confusion on the VHS's operating system was from several changes to the type of system used through its development. The first models used a Kalashnikov-style long-stroke piston, which was changed in 1999 to a lever delayed blowback system from the FAMAS. The next year, it was changed to a direct gas impingement system with a forced ventilation feature that formed a pneumatic cushion behind the bolt. The VHS was patented in that form in 2000 giving the impression of a “gas cushion” feature. That model was publically known up to 2005. In 2004, the final and current operating system of the VHS was changed to a gas-operated, short-stroke piston system.
Also the recent Croatian combat experience influenced the rifle project: VHS is probably the only modern assault rifle to have standard integral sights for using both a grenade launcher and rifle grenades.
When the VHS went through service life testing it fired 50,000 rounds without suffering any main parts breaking. The barrel has a birdcage flash suppressor and can fire rifle grenades. Like the FAMAS, it has sliding grenade boom guide and grenade high-angle launching sight to aim when the rifle is turned on its side, but the sight is mounted on the underside of the carrying handle on the VHS instead of under it. The rifle and carbine have different gas regulators, both with three setting changed by pushing in and turning 120 degrees: normal; high (larger opening for weak ammunition); and cut-off (for rifle grenades).
One of the problems with the VHS is poor ergonomics. The fire selector has three positions for safe, semi, and automatic fire with no 3-round burst option. Production model rifles have the selector inside the trigger guard. Changing firing modes is difficult as the crank must be rotated a long distance before either firing mode is selected. It is also for right-handed use only; the receiver can only eject shells out the right side and cases leave toward the rear sharply. There is even the chance of spent cases hitting the shooter's arm depending on elbow positioning. These are unusual features, as the non-reciprocating cocking handle is located centrally under the carrying handle and is flexible to be pulled from either side.
Models presented in 2008 showed the VHS being STANAG magazine compatible. This was changed shortly after to accept HK G36 magazines. The reason was because the Croatian military has more G36s (which the VHS will replace) than M16-type rifles.