Tax Enquiry and Investigation Service

Taxpayers are responsible for calculating their own tax liabilities. HMRC then police the system by investigating the accuracy of these tax returns by undertaking targeted or random tax enquiries. In response to this we offer clients to join our tax enquiry and investigation service.

Clients can then rest assured that if a tax enquiry is opened into a business or personal tax return, any additional professional fees (excluding the VAT, for VAT registered clients) that we charge for dealing with the enquiry will be paid direct to us by our insurance policy. We recommend that all of our higher risk clients and those who wish to actively mitigate this uncertainty should take out this cover.

Please note that this service is only available to our clients who we complete business or personal tax returns for.

Main Tax Investigation Service Terms and Conditions

• This insurance is underwritten by PfP.   PfP are one of the premier providers of insurance in this field. The main features of the cover are:
• There is no excess if a claim is made on the cover.
• Generally, cover is limited to £100,000 (£2,000 for interventions)
• Cover for directors is automatically included in the cover for the company provided we act for both.
• The cover includes aspect and full enquiries, HMRC interventions, employer compliance reviews, VAT assurance visits, IR35 and status enquiries.
• Cover can extend to new clients, for whom we have not prepared their last tax return.
• If you need to make a claim on this policy we administer all aspects of the claim procedure.

The Tax Investigation Service cover runs from 1 April each year.

Why take out our Tax Investigation Service?

This will give you peace of mind that there will not be any unexpected future fees from us in the future if HMRC open a tax enquiry. Typical reasons why HMRC  open such tax enquiry:

1. Something unexpected on one of your recent tax return submissions or tax payment/refund pattern.
2. You are in an area they are currently targeting (eg cash traders)
3. HMRC have received data via their Connect computer (see below) that is not consistent with your tax return disclosures.
4. Random/rotational.

The £100m HMRC ‘Connect’ (data matching and risking tool) computer programme collates data from the following sources and uses AI to compare this information to tax return disclosures, to identify possible “under-declarations”:

• • Government Agencies:
    • Council tax records
    • Electoral roll
    • DVLA,
    • Local authorities,
    • Foreign tax jurisdictions
    • Land Registry
    • Companies House
    • Border agency
    • DWP
    • Legal cases
  • Other Sources:
    • Flight sales
    • Banks,
    • Money service businesses (for transferring money abroad)
    • Pensions
    • Credit card processing companies and online payment providers
    • Credit reference agencies
    • Social media,
    • Online payment processors (including PayPal)
    • Digital selling platforms (including Amazon, eBay, Gumtree, Airbnb, Vinted & Etsy)
    • Google street view
    • Insurance companies
    • Property websites
    • Tenancy deposit scheme
    • Leaks (eg Panama papers)

HMRC currently use data from the above sources to send out ‘nudge letters‘ to an entire batch of taxpayers that they target as perhaps not fully declaring all taxable income sources (eg those that sell a property that is not their main residence and on which rental profits have not previously been declared).

Main policy details: 

• Our Service

Get in touch with your local office and speak to one of our specialist advisers about our Tax Enquiry and Investigation Service.