Last year HMRC opened nearly 300,000 tax investigations, collecting 34.1 billion pounds in unpaid taxes- many of these investigations were randomly selected. Anyone can be subject to an investigation and they may cover many different aspects of tax- be it self-assessment, VAT, Corporation Tax, etc.
About investigations
HMRC has the power to inspect business documents and assets at your premises and can request information as far back as six years. These investigations are disruptive, and can often last more than a year.
If HMRC does state its intention to investigate your tax, don't panic. Make sure to contact us, as we can deal with this on your behalf as your accountant. We will translate the many complicated questions HMRC may pose, manage the entire investigation, and minimise the impact on your business and personal life.
However, the cost of supporting you throughout an investigation is not covered in our usual accountancy fees. This is where the tax investigation insurance comes into play, as if you take out this insurance our fees will be paid for by the insurance company if HMRC investigates you. We offer the service to all our limited companies, partnerships, sole traders, and individual clients.
One of our clients recently had a random investigation opened by HMRC, after they had stopped trading. They wanted to look at old VAT returns from the previous 4 years to check if they were correct. There was no supposed reason for this investigation.
Luckily, even though this client had stopped trading in August 2023, they were still covered by the Tax Investigation Insurance, as the annual fee was paid for in July 2023. This meant that all the time Kym spent communicating with HMRC, preparing documentation, and checking the returns was not billable to the client, and was instead covered by insurance.
There is no current outcome to this as it is an ongoing investigation- watch this space for an update!
Help us to help you
If you are investigated by HMRC, they will ask to check all the records- including receipts and documents that relate to any returns. Luckily as all our paperwork is held digitally through Dext, it is easy to sort through and pass over. There is no need to trawl through files upon files of paperwork! An added bonus to this is that you wouldn't need to do anything- we should have all the information needed.
That being said, it's important to note that the more paperwork we are given by you when initially preparing the returns, the more accurate the returns are, so it's therefore less likely that HMRC could dispute anything.
Our insurance runs from the 1st of July to the 30th of June each year, so make sure you check out the link below to sign up and be covered for the upcoming year!
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