HMRC Investigation Protection ensures you have the best representation without worrying about spiralling fees
In 2020-21, HMRC collected £30.4 billion through compliance activity error, avoidance and evasion, increasing closing the 5.3% UK tax gap (the difference between tax that should be paid and what is actually paid). And, they are looking to improve on this, with many more trained investigation specialists now using the latest technology and information at their disposal to launch campaigns and taskforces to maximise tax revenues.
Despite this, many businesses choose to believe that they are not at risk from HMRC investigation and, as a result, they fail to plan for how an investigation would be managed.
Undergoing a tax enquiry can be incredibly stressful, especially when confronted with a team of HMRC officers delving into your Tax, VAT and PAYE records. In this situation, it is essential to have an experienced and professional accountant representing you and your business, to avoid stumbling into a minefield of technical complexity.
An investigation can also be hugely costly if you don’t have a fee protection agreement in place with your accountant, even if HMRC finds your tax affairs are in order.
If you’re a Blue Rocket client, however, you benefit from our HMRC Investigation Protection, giving you peace of mind knowing that should you ever be investigated, you can be sure that you will have the highest level of representation from our team without worrying about escalating expenses.
No one is immune to scrutiny, any business can be investigated
Due to the increased focus, HMRC introduced its Connect System, designed to identify those who may have paid too little tax. This system is an £80m investment programme and now contains over 22bn lines of data from merchant acquirers, banks and building societies, property-based information, land registry, letting agents, mortgage applications, DVLA, foreign data from overseas tax authorities, the tax evasion hotline – and their data sources are being continuously expanded.
HMRC’s Connect System is now responsible for selecting 9 out of every 10 enquiries, and HMRC claims that any information received by them concerning any individual taxpayer can now be linked to the taxpayer’s file in minutes.
No business is too small or too large for HMRC to challenge; those targeted include cash businesses, tradespeople, farmers, medical professionals, solicitors and individuals. Even if you have done nothing wrong and can provide evidence of compliance, you can still be subject to a costly tax enquiry.
Even a routine tax investigation can cost circa £10k in fees to resolve
If you’re a client of ours, we will help you to ensure that compliance issues are avoided. But, even if HMRC finds your tax affairs to be in order, the process itself can be lengthy and put a strain on you or your business, leaving you with a hefty bill to cover your professional costs despite proving your innocence.
The accountancy fees involved in even the most routine tax investigation can escalate to as much as £10,000, which is a significant unplanned cost for any business. Let’s look at a few cases…
A few cases in point
As an example, an enquiry into a non-resident individual took several years, with HMRC requesting a large amount of detailed information. HMRC ultimately concluded that the tax treatment was correct and that there were no discrepancies. Had the individual not had fee protection in place, the costs would have amounted to in excess of £30,000.
In another case, a law firm was subject to an employer compliance review where HMRC was specifically considering the status of self-employed workers. The accountant challenged HMRC’s view that the workers should have been employees. After a four-year enquiry, a successful outcome was achieved. Had the law firm not had fee protection, the accountancy costs in respect of this case would have been £10,000.
How to avoid the unplanned cost of a tax investigation
As a Blue Rocket client, you benefit from HMRC Investigation Protection, removing the worry of unplanned fees due to an unforeseen investigation by HMRC. This covers you for up to £100,000 in accountancy fees, making it an invaluable part of your accountancy package.
With HMRC Investigation Protection, we will:
- Remove your concerns about the cost of an enquiry
- Ensure you receive the best defence so that your tax position is protected
- Challenge HMRC’s assertions and assumptions head-on
- Ensure that the basis of any enquiry is correct and that your case is handled fairly
- Handle all communications with HMRC, including letters, phone calls or notes issued
- Ensure the tax inspector is only asking for relevant information and documents and provide all supporting information from our files that relates to your accounts
- Prepare for and attend any face-to-face meetings with the tax inspector
- Argue any complex or technical tax cases that are raised during the enquiry
Although we can’t take away the stress and anxiety of being under investigation, with HMRC Investigation Protection we can remove the cost of fees and work to achieve the best outcome for you, whether you’re facing a PAYE or VAT visit, a technical enquiry or full blown books and records enquiry from HMRC.
To find out more, please get in touch with our team by calling 01322 555 442 or via email firstname.lastname@example.org.