Tax investigations by HMRC have been on the rise for a number of years. Anyone can be selected for an investigation by HMRC, whether you are a business, a director or an individual taxpayer.
What does an investigation involve and why does it happen?
Put simply, a tax investigation is when HMRC decides to take a closer look at your finances to ensure you, or your business, is paying the right amount of tax, both now and historically. Although it may seem alarming, it does not mean you have done anything wrong. Although HMRC is using more sophisticated technology to identify suspect businesses, they also carry out numerous random investigations in their attempts to reduce the deficit related to tax collection.
Tax Collection Key Facts
- £33 billion is the estimated tax gap between what HMRC collect and what they should be collecting
- £17.5 billion of that gap is attributed to small businesses (£14.1 billion) and individuals (£3.4 billion)
- Tax and VAT investigations are a key tool in reducing this deficit
If you are selected for investigation, it is a process with which you must legally cooperate. This is also the point to contact your accountant.
The preparation for an HMRC visit can take some time, as can the visit itself along with any subsequent work requested by HMRC. So, get in touch as soon as you are advised of the visit as you will need to agree a plan of action.
Who Covers the Cost of Investigation
HMRC inspections and the related work, can be lengthy and as a result costly, as unfortunately a tax investigation is not covered by your usual accountancy fees. This is why Greaves West & Ayre offers clients a fee protection service that will safeguard you against unforeseen professional costs arising from any correspondence or visit relating to an enquiry from HMRC.
By taking advantage of this service you can be safe in the knowledge that the HMRC enquiry process will be handled by a team you are familiar with and who understand your business. We will work on the case for as long as required to ensure you get the best possible outcome, without you worrying about escalating accountancy fees. That way you can continue to dedicate your time to the important task of running your day to day business.
To help explain further, here are some questions that we are often asked.
What is a Tax Investigation Service? It is a service which protects our clients who face a tax enquiry. For a small annual fee, we will defend you if you are selected for an investigation without you worrying about the cost. We will
- liaise with HMRC on your behalf
- prepare and defend your case
- handle all correspondence and meetings with the tax inspector
- provide full representation and challenge HMRC’s arguments
What does it cover? The tax investigation service will cover our fees if HMRC investigate you. The service will now also protect you for any investigations into approved Coronavirus Job Retention Scheme and Self-Employment Income Support Scheme payments, as well as gift aid cover and Stamp Duty Land Tax and its regional equivalents.
What is not covered by the service? The service does not cover routine compliance work such as filing your tax return etc. It also does not cover criminal prosecutions and fraud, as well as any tax interest or penalties that may be payable as a result of an investigation.
How much will it cost me? This really depends on the size and needs of your business so please contact us so we can give you a tailored quote. Like any other protection, we all hope that we don’t need it but when a costly enquiry starts, our clients have been glad that they paid the small annual charge.
What are the benefits? Peace of mind. We can’t take away the stress and anxiety of being under investigation, but we can provide the best possible support and advice without you having to worry about the cost.
Sadly, no taxpayer is immune to HMRC investigations. That is why we strongly advise that clients take up the fee protection service. The stress and cost of an investigation can be considerable and a small premium will deliver you peace of mind knowing that the people you trust will provide you the best support if HMRC comes knocking.
If you would like more details about our fee protection service or if you have any worries or concerns about an HMRC tax enquiry, please get in touch.