Find Peace of Mind with Tax Investigation Insurance

In recent years, HM Revenue and Customs (HMRC) enquiries have increased and are being conducted with a higher level of detail and persistence. These investigations can be stressful, problematic, time consuming and very expensive.

However, these worries can be avoided if you make sure you are protected. In this blog, we will delve into what HMRC enquires are and how you can protect yourself and your business.

What is a HMRC enquiry?

Each year, HMRC enforce enquiries onto individuals or businesses to ensure they are paying the right amount of tax. Where they decide there is a risk that the correct amount of tax hasn’t been paid, they take compliance action in the form of investigatons. In the event of an investigation, HMRC may check for any taxes you pay, your self-assessment tax return, your company tax return, PAYE records or your accounts and tax calculations.

Who is most at risk?

With 7% of tax investigations selected at random, it is fair to say that everyone is at risk. HMRC are using their compliance resources, as well as the use of AI, to undertake targeted campaigns and cross-tax enquiries in an attempt to maximise the tax it can recover. Therefore, anyone trading in business is at risk of an investigation – however good your records are. Whether you are an invidual simply filing a self-assesment return, or a business owner.

What triggers a HMRC enquiry?

An enquiry can happen without a specific trigger. Even if you have filed your tax return on time with no errors or missing information, you could still be targeted.

However, from experience with these investigations, we are aware of certain factors that may prompt an enquiry including:

  • Someone notifying HMRC about any unusual activity in your accounts
  • Late filing of your tax returns
  • Discrepancies on your tax return or in your accounts
  • You work in a high-risk industry (for instance one that mainly takes cash payments)

What is fee protection insurance, and will it benefit me?

Fee protection insurance (also referred to as tax investigation insurance) provides you with coverage if there is a HMRC enquiry against you or your business. The main benefit of taking out this policy is that if you are targeted for an enquiry, your accountants will handle the investigation on your behalf and all the accountancy fees will be covered by the policy at no additional cost to you. Ultimately, this policy will give you peace of mind and protection from a large tax bill or penalties.

At Thompson Wright, we offer our clients a comprehensive tax investigations package that has helped many save thousands in professional fees. With HMRC’s continued investments in compliance, ensure that you are protected and contact us for more information.

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Posted in Blog, Latest News.