Are you protected in the event of a Tax Investigation?

HMRC enquiries are better targeted and are being undertaken with an unprecedented level of detail and persistence. In 2019/20, the total tax revenue increased by £8.8bn to £636.7bn with compliance activity yielding £36.9bn – an 8.2% increase in additional tax on 2018/19.

Even if you have done nothing wrong, you may still be selected for a detailed review of your tax affairs, resulting in an unnecessarily high tax bill if you are not protected.

We cannot prevent HMRC from selecting you for an enquiry, but we can help to minimise the impact by dealing with HMRC on your behalf.

In the event of an investigation by HMRC, it is important that you appoint specialists to defend yourself or your business. The tax investigations team at JS have the experience and expertise to ensure that you only pay the right amount of tax and do not concede to HMRC’s demands without adequate counter-argument.

Below are two examples of the costs you could face if you are selected for an investigation.

Personal Tax Enquiry:

HMRC opened an enquiry into an individual’s Capital Gains Tax position rollover relief and income from property. At the outset, HMRC requested a substantial amount of information. A detailed reply was provided, but HMRC continued to challenge the claim for rollover relief. After further correspondence, the enquiry was closed without any amendment to the return. The fees incurred for representation in respect of the enquiry totalled £13,000.

Software Company:

An SME was selected for an HMRC enquiry into the company’s claim for Research and Development Tax Credit Relief to check the qualifying expenditure. A detailed reply was provided by the practice and a conference call was held with HMRC to explain the R&D claim. As a result, HMRC was able to close the enquiry with no adjustments and the costs incurred were just over £6,000.

JS Tax Investigations Service

Anyone can be selected for an enquiry, and the ramifications can be far-reaching.

The professional fees for dealing with an enquiry, as you can see from the examples above, can run into thousands of pounds.

As your adviser, we offer a Tax Investigations Service which provides you with peace of mind that in the event of an HMRC investigation you or your business will be protected by our insurance policy against the professional fees arising.

Even where a business has ceased to trade, HMRC still has the ability to enquire into Tax Returns declaring income up to the date of cessation. As such, it is advised that where you still remain a client of the Practice, you should still subscribe to our Fee Protection service until the window of opportunity for HMRC to enquire into that Return(s) has ended.

Added Protection!

Our service will now also protect you for any investigations into approved Coronavirus Job Retention Scheme and Self-Employment Income Support Scheme payments, as well as Gift Aid cover and Stamp Duty Land Tax and its regional equivalents*.  

Our tax investigations service enables us to:

• Ensure you receive the best defence to protect your tax position
• Challenge HMRC’s assertions and assumptions head-on
• Establish that the basis of any enquiry is correct and make sure your case is handled fairly
• Ensure the tax inspector is only requesting relevant information and documents
• Provide all supporting evidence from our files relating to your return
• Handle all communication with HMRC, including letters, phone calls or notices issued
• Prepare for and attend any face-to-face meetings with HMRC
• Address any complex or technical tax queries that are raised during the enquiry

If you would like any additional information regarding our Tax Investigations Service or would like to subscribe to the service, please contact Claire Pilkington on 01942 292517 or email claire.pilkington@jsllp.co.uk.

*The Government may also want to review claims made and grants paid under the COVID-19 Business support schemes. If an enquiry into an approved COVID-19 Job Retention Scheme grant or Self-Employed Income Support Scheme payment is carried out by HMRC, using their Information and inspection powers contained with Schedule 36 FA 2008, this is included in the service, subject to usual Terms and Conditions.