Insurance Against Tax Invasion
The chances of being subject to a tax investigation are higher than ever because the HMRC is expanding the number of inquiries it is conducting into ‘ordinary’ taxpayers. In addition to this, the quantity of tax collected from self-assessed individuals deemed to have either underpaid on tax, failed to declare earnings or even evaded tax, has also increased significantly.
If you are investigated, you will need to make sure your accounts are in good order. This kind of investigation it can be very stressful, and not to mention costly if you are charged penalties. An investigation can last around 16 months, during which time you may need to pay an accountant’s fees to help you prepare information on time and in good order.
You can pay your accountant or tax adviser a fee to insure you against the costs of your business being subject to a tax investigation by HMRC. This insurance will be a minimal flat-rate, and it will cover you for the account’s fees throughout the duration of the process. This fee will enable you to receive the support of that professional throughout the process, which could otherwise cost you thousands of pounds if paid on an hourly basis.
You can ask your accountant to arrange this for you, or you can go to an insurer to provide you with this type of cover. An insurer may, however, restrict the types of investigation that they will cover, be unwilling to help with VAT, PAYE and partial (‘aspect’) investigations or if they deem you to be at fault. You will also be appointed an accountant, and this won’t be your usual accountant. On the other hand, if you work with your usual chartered accountant or tax adviser, or someone you appoint directly, this person will have an added incentive to deal with inquiries promptly, and help you to a favourable outcome, so that you want to work with them in the future.
In return, you should be as forthcoming as possible, and provide as much information as possible, which can reduce any penalties you are subject to. A tax adviser can help you understand what is required of you, to make sure you have a full picture of the grounds for the investigation and how you can best defend yourself. Having insurance against tax investigation, including IR35 insurance, can save you a great deal of heartache and money down the line.
About Perrigo Consultants
We offer personalised tax services for all types of businesses, whether you have a small property business, work as a contractor or run a limited company with employees. Our team goes the extra mile to ensure that your business is running as smoothly and as profitably as possible.
We will be happy to review your current situation and advise you on how you could benefit from our accounting and tax expertise.
Call 01299 488860 for a free, no obligation consultation.