Tax Investigation Insurance
By taking out tax investigation insurance with the help of our accountants, you can mitigate the potential cost of being investigated by HMRC, which can be time-consuming and costly.
Get StartedWhat is tax investigation insurance?
Tax investigation insurance, also referred to as HMRC investigation cover, is designed to reimburse the professional fees incurred for defending you, should you face a tax enquiry. Given that just one investigation can last a number of years, this type of cover has the potential to save you thousands of pounds in fees.
Why was tax investigation insurance introduced?
In recent years, HMRC have started various new measures in an attempt to crack down on individuals and businesses that are not paying enough tax. At first, HMRC introduced amnesties for tax payers to make voluntary disclosures of undeclared taxable income and in return their tax liabilities were forgiven. HMRC can open up a compliance check into your tax affairs at any time and they may check and analyse all your business, accounting and tax records for all taxes.
Even if you have been timely, honest, and accurate in submitting your accounts and tax returns, it is possible they will start an enquiry, which could end up being a very expensive process for you. As spot checks become more commonplace (one in ten small businesses facing tax inquiries) and minor discrepancies can lead to full tax enquiries, many people are opting to protect themselves and their assets with tax investigation insurance.
Why do you need tax investigation insurance?
If you’re a sole trader or small business who always keeps correct and up-to-date records, submits their tax return annually and pays any taxes due on time, you might think tax investigation insurance is simply an expense you can live without. However, as mentioned above, you can be randomly selected for investigation any time and while you might not be worried about fines for underpayment or incorrect declarations about your taxes, the investigation itself can be long and stressful, and you have no option but to comply.
The exact cost will vary, and a lot will depend on the nature of your business, the number of transactions you make and other factors, but this type of investigation is not only a financial headache. On average tax investigations take around 16 months and cost roughly £5,000 in accountancy fees according to the FSB. Trying to run your business and comply with HMRC demands for financial records and tax information can put a real strain on your operations and seriously impact your efficiency. This is why tax investigation insurance is so important.
How we can help you
Jan McDermott Chartered Accountants specialise in all accountancy and tax support for businesses including helping them with tax investigation insurance. If you’re interested in investigation cover for your business, our friendly team of experienced accountants are on hand to offer advice and guide you through the process, ensuring you get the right level of insurance cover for you and your business.
Contact our insurance experts today to get peace of mind if you’re chosen for a HMRC investigation.
Frequently Asked Questions
Like with other types of insurance, tax investigation cover can be customised to suit the needs of your business. A lot of providers will create policies that insure you against professional fees incurred when complying with an investigation and/or defending disputes up to an agreed limit. You can also be protected from income tax self-assessment enquiries, corporation tax, IR35 enquiries, employer compliance disputes, VAT disputes, business records, and other checks.
Even though tax investigations are selected randomly, HMRC is paying closer attention to several specific trades and professions. Some examples of these are self-employed plumbers, joiners, builders, sole traders, freelancers, consultants, and contractors.
Top tips for business owners:
- Check that you understand all of your tax liabilities
- Speak to our accountants if you have any doubt relating to your accounting or taxes
- Make sure your records are complete and regularly check their accuracy
- Consider using bookkeeping software like Xero to keep track of your accounts
Alan Robson
They provide us with a fully outsourced finance function so that our own team can focus on our business. They implemented Xero software from day one of the company meaning that we have real-time visibility of our business at all times, The monthly management accounts meetings we have with Jan really add value to decision-making and strategic planning and we wouldn’t be without them.
Peter Broxton
Their professionalism, expertise and client care are outstanding and they have supported our growing business no end. They look after everything from our bookkeeping, VAT, annual accounts, as well as claiming Research & Development tax relief, preparing budgets and forecasts and assisting with grant claims. The whole team are always responsive, friendly and reliable and we wouldn’t hesitate to recommend them to anyone looking for a trustworthy and efficient firm to look after their business finance requirements.
Scott Hackett
I moved my accounts over to Jan at the beginning of the year and have been extremely impressed with her attention to detail and precision. She’s made it easy for me to understand and manage all the key aspects of my accountancy, as well as offering useful suggestions of ways to improve and make things work more efficiently for me and my business. I’d highly recommend Jan and her team to anyone looking for professional, friendly, and reliable accountants that truly get to know you and offer a tailored service.”
Alistair Evans
Jan McDermott & Co have been our accountants for over 15 years and have not only ensured our accounting records are accurate and legal, but also provided us with first class advice to help us grow. They recommended our move to Xero accounting software which has revolutionised our business, allowing us to create predictable income through the use of Go Cardless Direct Debits, and streamlining our day to day accounting operations. Jan and her team are friendly, easy to work with and take time to understand a particular problem or situation. I wouldn’t hesitate to recommend them to any business that wants an accountancy firm they can grow with and depend on.