Tax Investigation Assistance

If there's one time you need a good accountant by your side, it's when HMRC are prying into your affairs. If you don't know your stuff (or have an accountant who does) you may end up paying a fortune in underpaid tax, and penalties for carelessness/negligence in preparing your return.

Knowing When To Fight, And When To Settle

Sure, you may want to fight HMRC if you know you're right. However, sometimes the best way forward is to settle at the earliest opportunity. Paying a professional £2,000 to save £1,000 tax is not good business sense, however much your accountant may encourage you to do so.

Having said that, under HMRC's new guidance fighting your corner is more important. If HMRC find a mistake, they will probably argue it arose because the return was prepared carelessly/negligently. If so, this means not only is the underpaid tax due, but they may also levy a penalty as well.

What To Do If / When You Get An Enquiry

Some enquiries are raised due to irregularities in the accounts, others are completely random. Most businesses will suffer an enquiry at some point. When received, the first thing you should do is contact your accountant, advising the scope of the enquiry.

Simple enquiries may be along the lines of "Please provide a breakdown of expense X". More complex ones may be on a technical point, or query the validity of the accounts in general.

Even if you think you can answer the question(s) yourself, you should speak to your accountant first, as the wording of your response can be vital.

Tax Investigation Fee Insurance

Dealing with enquiries can be expensive. Even if you end up entirely in the clear, it is likely your accountant will have spent considerable time discussing things with you and responding to HMRC.

Many accountants will offer an insurance against these fees. Effectively you pay an annual insurance premium, and should HMRC enquire into your affairs, the insurance company will pay your accountancy fees related directly to dealing with it.