Facing an HMRC tax investigation can be a daunting experience, but as a Harland client we’ll support you every step of the way. Although HMRC has the authority to scrutinise your financial records, being well-prepared with specialist insurance and supported by our team of experts, can make the experience more manageable.
Firstly, it’s important to understand that a tax investigation does not necessarily imply wrongdoing. HMRC conducts investigations for various reasons, ranging from random selection to specific concerns about potential tax evasion. Regardless of the trigger, cooperation and transparency are key. We strongly recommend our clients taking out specialist tax investigation insurance to cover against any fees that result from in-depth data being collected for the investigators (which can be a big job). Scroll to the bottom of this article for more information about specialist insurance options that can help protect you.
What to expect
When facing an HMRC tax investigation, individuals and businesses should expect a thorough examination of financial records, including income, expenses, and other relevant transactions. This process may involve requests for documentation, interviews, and discussions about the nature of the business or individual financial affairs. It’s crucial to respond promptly and provide accurate information to demonstrate cooperation.
How to prepare
Keeping meticulous records of financial transactions is essential and can expedite the investigation process. As your accountants, we can provide invaluable support during an HMRC tax investigation, offering guidance on navigating complex tax regulations, ensuring that all necessary information is provided, and helping to present a strong case for compliance.
Tax investigation insurance
There are 300,000 HMRC investigations a year (around 1 in 10), which generally means every taxpayer (or rather, every self employed person), will get inspected at least once within a ten year period. A statistic not commonly known. We strongly advise all our clients to take out specialist insurance, particularly as from the moment your policy starts, not only are you covered for that tax year, but you will be covered for ALL previous financial years too.
What specialist insurance includes
Specialist tax investigation insurance is designed for both self-employed individuals and limited companies. It provides expert support and financial protection if HMRC carries out a compliance check, visit, or full investigation, even if no dispute has yet arisen.
Typical cover includes HMRC enquiries and investigations relating to:
• Corporation Tax Self-Assessment
• Income Tax Self-Assessment
• PAYE and National Insurance
• VAT visits and reviews
• The Construction Industry Scheme (CIS)
• IR35 and off-payroll working
• Stamp Duty Land Tax
• Employer compliance visits and record checks
• Capital Gains Tax
• National Minimum Wage
• Gift Aid legislation and regulations
• P11D and employee benefits
• Inheritance Tax
• Child Tax Credits
Some policies also include access to a dedicated business support hub, providing tools and guidance to help you stay compliant across HR, health and safety, and legal matters, saving you time and helping you focus on growing your business.
Conclusions
While an HMRC tax investigation may be a stressful experience, being well-prepared and cooperative can significantly ease the process. By maintaining accurate records, having specialist insurance, and seeking our professional guidance, we can navigate the investigation together with minimal stress and maximum confidence.
Next steps ...
Specialist insurance can take a lot of the worry out of an HMRC tax investigation and give you peace of mind that you won’t be facing unexpected costs. If you’d like to explore your options, speak to our administrator, Liz. She’ll guide you through what’s available and help you get everything set up smoothly.
