Tax investigations can happen to anyone – whether you are an individual or in business – however good your records are. HMRC regularly undertake random enquiries as a means of policing the system.
With a large deficit to fill and investment by the new government over the next five years, the plan is to recruit an additional 5,000 tax officials. Therefore, it is likely we will see an increase in tax investigations.
Whether it’s a PAYE or VAT visit, cross-tax enquiry, technical challenge or a detailed books and records review, our tax investigations package is designed to achieve the best possible outcome for you. We therefore recommend that all our clients subscribe.
We have partnered with Markel Tax for many years and we will be sending invitations and renewal letters to clients over the next few weeks detailing the cover available. For an annual charge, you can rest assured that you should be protected against the professional costs associated with an HMRC enquiry.
I have listed below a couple of real-life examples from our providers which demonstrate just how useful this protection can be.
R&D tax relief enquiry
HMRC initiated a compliance check on an R&D Tax Relief claim by a small business. After extensive correspondence, HMRC rejected the claims as non-qualifying, posing a significant financial risk to the business. Believing in a reasonable chance of success, an application for Alternative Dispute Resolution (ADR) was made. With specialist representation provided for by the tax investigations service, ADR concluded with HMRC agreeing that the projects were qualifying to the relief of the client. The service covered representation costs exceeding £9,500.
Personal tax
HMRC initiated a compliance check into a taxpayer’s disposal of shares in a company, along with additional shares and securities. HMRC requested extensive documentation to support the disposal. Over the course of nine months, there was considerable correspondence between the accountant and HMRC, during which HMRC persisted in requesting information to validate the transactions. Ultimately, HMRC concluded that everything was in order and issued a closure notice with no amendments required. Despite no discrepancies being found, the client incurred a representation bill amounting to just under £23,000, which was fortunately covered by the Tax Investigations Service.
(Source: Claims settled by Markel Tax in 2023-2024.)
With HMRC’s continuing investment in compliance, many more individuals and businesses are likely to face an enquiry and whilst no one can predict if, or indeed when you might be targeted, you can take pro-active steps to protect yourself.
If you would like to discuss the cover in more detail or if you have any questions, you are very welcome to get in touch with myself or your usual Lambert Chapman contact.
Disclaimer
The views expressed in this article are the personal views of the Author and other professionals may express different views. They may not be the views of Lambert Chapman LLP. The material in the article cannot and should not be considered as exhaustive. Professional advice should be sought in connection with any of the issues contained in the article and the implementation of any actions.