Tax investigation insurance

The past few years have seen HMRC implement a wave of new measures in a bid to crack down on individuals and businesses not paying enough tax.

At first, HRMC introduced tax amnesties to tax payers to make voluntary disclosures of undeclared taxable income, in exchange for forgiveness of tax liabilities. Then it was revealed that HMRC would start carrying out spot checks of business premises, where representatives inspect tax records on everything from corporate income and PAYE, to NI, Capital Gains and VAT.

If you pay tax, HMRC could pay you a visit at any time and inspect your records. Even if you’ve been honest and accurate declaring tax, it’s possible that they will launch an enquiry, which could end up being a costly endeavour. Appealing a decision can mean even more money, plus your precious time – something we know is in short supply if you have your own business to run.

With spot checks becoming more commonplace (one in 10 small businesses are currently facing tax inquiries) and even minor discrepancies warranting full-scale audits that can span months, many people are making the wise decision to protect themselves and their assets with tax investigation insurance.

What is HMRC investigation insurance?

Tax investigation insurance – also known as legal expenses insurance or HMRC investigation cover – will reimburse the professional fees incurred for defending you in the event of a tax enquiry. As just one investigation could last months, this type of cover could potentially save you thousands of pounds in fees.

How does it work?

From as little as £93, tax investigation insurance will cover the professional fees if you’re subject to an HMRC tax investigation.

The insurance policy will pay out up to £100,000 for professional costs for:

  • Dealing with correspondence from HMRC
  • Attending meetings with HMRC up to and including an appeal to the First-tier Tribunal or Upper Tribunal

Main policy benefits:

  • Your advisor will defend you if you receive any correspondence or are visited by HMRC and are subject to HMRC costs
  • The potential high cost of professional fees for defense can be claimed under the policy
  • You won’t be forced to accept unreasonable HMRC tax charges due to concerns about professional fees

A real-life case study

A client who works as a property developer found themselves subject to a VAT compliance review from HMRC. The review concluded that, as the client was making both exempt and taxable supplies, they shouldn’t have recovered 100% of input tax in previous years.

This is where tax investigation insurance came into play. The client claimed on their policy and their accountant successfully disputed HMRC’s assertion on the basis that the client was below the partial exemption de minimis limit, thus avoiding a potential tax liability in excess of £20,000. Accountancy fees of £3,500 were incurred and recovered from the tax investigation policy.

Work with Stride

We’re a broker with decades of industry experience, and we’re partnered with some of the UK’s leading insurers including AXA, Aviva and Zurich. Our unrivalled customer services extends far beyond securing you a great deal on your insurance, with our dedicated in-house support team always on hand to answer queries or help with a claim.

So, to safeguard your business from unexpected tax investigation costs, get a quote online today or contact us on 023 9224 8790.

Top tips for business owners

  • Make sure you understand all of your tax liabilities
  • Speak to your accountant or a tax advisor if you’re in doubt
  • Ensure records are complete and check accuracy on a regular basis
  • Consider bookkeeping software to keep track of your accounts

Source:

https://www.taxassist.co.uk/resources/show-news/title/one-in-ten-small-firms-facing-hmrc-tax-investigations/id/700000041/

Need help finding the exact insurance for you? Get insured
Need help finding the exact insurance for you? Get insured

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