Tax Investigation Insurance

Ensuring compliance every step of the way.

Financial Employee



Whether your business is large or small, HMRC has been employing a new range of tactics to ensure that businesses are paying the correct amount of tax.

Tax Investigation Insurance provides you with professional, expert defense in the event that HMRC investigate you or your business to ensure tax compliance.

Our tax consultants will be with you from the beginning to the end, dealing with HMRC for you so you don't have to deal with the stress or worry.

Businesses both large and small across the UK are being subject to a wave of action from HMRC.

HMRC are conducting more spot checks and providing more tax amnesties than ever before.

The 'Taxman' is employing a wide range of new tactics aimed at ensuring companies are paying the correct amount in taxes.

Even if your business is paying it's taxes correctly if HMRC launches an investigation into your business it can be time-consuming and costly for your business.

Furthermore, appealing against HMRC decisions can be a costly and long process.

Tax Investigation Insurance will support your business should it come under investigation from HMRC, taking the worry and stress out of it.

You will receive support from taxation experts and under the Tax Investigation Insurance those same experts will conduct all of the communication with HMRC, ensuring that there are no errors being made that could result in further fines.

What is HMRC doing to combat tax evasion?

So as to recover revenue that has been lost through tax evasion in the UK, HMRC has started to run a range of crackdowns on professions that it believes that tax evasion has been rife, or into industries that it feels could result in 'easy wins'.

Before HMRC launched its crackdowns into certain professions it also provided 'tax amnesties'.

For example, 'The Plumbers Tax Safe Plan', allowed plumbers an opportunity to declare in full their income and accept much more lenient fines from HMRC.

For those who decided not to partake in the scheme, they received warnings that they could face much stiffer fines if they were found to be making fraudulent or incorrect declarations.

Now that the amnesty has ended, HMRC has commenced in the promised tax crackdown, now hundred of plumbers are looking at being investigated.

Some plumbers are also facing prosecution and perhaps even a prison sentence.

Be aware that HMRC is not just focussing on plumbers.

Whether you are an individual taxpayer, director or business owner it is possible that HMRC will launch an investigation into you or your business and their tax affairs.

In every sector and walk of life, people should be aware that they can come under investigation by HMRC and take steps to protect themselves and minimise any risks to themselves or their businesses.

-----------------------------------------------------------------------------boxes---------------------------------------------------------------------------------------- 8 reasons why HMRC may decide to investigate your business for tax purposes. 1. HMRC receive a tip-off. Whilst HMRC never admits to receiving one, and are very careful with the information, it is widely accepted that a tip-off for tax evasion can lead to an investigation. Why would someone decide to tip off HMRC? The most common people who tip HMRC are: - disgruntled ex-partners or employees who already know about tax evasion within the company - a cash-only policy in your business - living a lifestyle that is beyond your reported means -----------------------------------------------------------------little boxes------------------------------------------------------------------------------------------ To avoid this you should: ------------------------- Living beyond your means is hard to redress, what if you have money from an inheritance, trust funds or investments? As long as you can prove you got the money legitimately you have nothing to worry about. ------------------------- Disgruntled ex-partners or employees are also easy enough to deal with, ensure that your business is not involved in any dodgy tax evasion schemes and you and your business should be fine. ------------------------- Regarding a cash-only policy, in the current day, it is not difficult to implement card payments, even if they are taken on delivery. There is no legally justifiable reason that a business only accepts cash. --------------------------------------------------------------------bigger boxes------------------------------------------------------------------------------------------- 2. Making regular mistakes on your tax returns. HMRC are able to make allowances for businesses and people that make a one-off mistake. They understand that not everyone is a certified accountant and will contact you to rectify it. They will be happy to make allowances if you can demonstrate that you weren't deliberately attempting to fiddle the books. However, if you are regularly making mistakes, or are repeating the same mistake that they have called you up for, HMRC will become suspicious. This may well lead to an investigation. If you are routinely making mistakes on your tax return, it is time to hire an accountant or fire the accountant that is making the errors. ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 3. Numbers fluctuating by large margins. It is extremely rare that a business will generate the same income each financial year. Conversely, it is also rare that the margins fluctuate widely each financial year. For example, say that 2017 was a very profitable year and your business made £900,000. Then in 2018, your business made £150,000, HMRC will notice. More than likely there will be a very reasonable explanation for this, but HMRC is going to ask questions. ------------------------------------------------little boxes ---------------------------------------------------------------------------------------------------------------- Inform HMRC what has happened: When submitting your tax return you can write notes and include any information about your year. ----------------- What happened that financial year? Did you have a baby? Were you off work with illness? Was there a large drop in the local market. ------------------ Protection through integrity. By being honest with HMRC and telling the whole financial truth you can avoid fines and penalties. ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 4. Unprofitability in previous years For years you have run a business and it is yet to make a profit, yet somehow you are still running. This is still a possibility, perhaps you have investment or inheritance that is carrying you through. However, if you are constantly, year on year filing a tax return to HMRC that states you do not owe them a penny in taxes, HMRC is going to begin to wonder how your business is still operating. --------another small box?------------ Protection through integrity Exactly as before, if you inform HMRC in the notes when you are filing your tax return, listing the reasons the business is still unprofitable and how you are kept afloat, it should help you to avoid an investigation. ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 5. The figures are not consistent with industry standards HMRC already has a pretty good idea of what people or businesses in the industry are earning. It knows that a pot washer is unlikely going to be earning £1000,000 a year and that a law firm is likely to be earning more than £25,000 each year. If your figures vary too massively from industry standards, HMRC is going to start asking questions, and it won't be too long before HMRC launch an investigation. How to avoid this trigger. 1 - If circumstances affect you and your business it is difficult to avoid this trigger, perhaps you sell more sunscreen because you run the only business selling it on the beach in Philadelphia. 2 - Establish yourself as the right type of business. A limited company that is pulling in £12,000 a year is going to appear more suspicious to HMRC than if it were a sole trader that it doing the same. 3 - Make sure you align yourself with the right crowd. If you are a sole trader, perhaps an electrician, it is advisable not to establish yourself as a limited company because it could rise to HMRC asking questions. ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 6. If the directors earn less than the employees. HMRC become suspicious if anything is out of the ordinary, and directors earning less than their employees is definitely not the usual. Everyone has heard PR stories about big corporate bosses who take a small salary and forward all of their benefits to their employees. This can be a great PR stunt for big businesses or big names, but in the small business world, will get the attention of HMRC. If a director is found to be taking the same or less pay than their employees then it can appear to HMRC that they are using avoidance schemes to pull profits out of their business. HMRC will launch an investigation to determine how altruistic that person really is. Maintaining the status quo really is the best way to avoid an investigation from HMRC. All businesses have hierarchies, and these hierarchies are often determined by wages. You could reward your employees with extra benefits or gifts, this should help you to avoid investigations from HMRC. --------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 7. Omitting income on your tax return. HMRC deals with millions of businesses every year in the UK, and whilst you may think, what are the chances that they will notice that I have skimmed a little bit off the top? There is a good chance they will if they do it will result in fines. This is because your financial fingerprints will also be all over any business or person that you have dealt with, whether you are receiving payment or buying something. This also applies to lenders on credit and banks as well. Many business owners decide to miss the odd payment on their tax return, and there is a fair chance that it might not get noticed, but the more you interact with other business and people the more likely it will be noticed. Protect yourself through your own integrity, keep your tax returns honest, and make sure there are no discrepancies that may be flagged for investigation by HMRC. ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 8. Failure to have representation. Accountants can be very useful to a business for many reasons, yet one of the little known uses is that an accountant can reduce the likelihood of you being investigated purely by representing your business. If you are a business owner running your own accounts, especially if it is a large business, it could indicate to HMRC two possibilities. 1) They do not want any third parties to see their finances. 2) Mistakes are being made because of a lack of knowledge and expertise. To ensure that neither is occurring, HMRC may decide to launch an investigation to determine how good your personal management of your accounts actually is. The solution to this is simple, get an accountant. If your business is highly profitable, you should get an accountant to manage its finances. ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Why should I get tax investigation insurance?

Even though your business may not be evading taxes, an investigation by HMRC is time consuming and costly for the business being investigated.

By getting Tax Investigation Insurance you are ensuring that in the event of an investigation your business will receive professional support and representation when dealing with HMRC.

Tax Investigation Insurance will relieve you fo the stress and worry of a compliance check by HMRC; leaving you secure and safe in the knowledge that when dealing with HMRC everything is done correctly, so you won't have to worry about fines and penalties.

What do I get?

Initial free consultation from our compliance experts ----------------- All claims are handled by tax revenue professionals ----------------- Advice and ongoing support from our in house experts ----------------- All contact with HMRC dealt with by our tax professionals ----------------- Full income and corporation tax inquiry protection ------------------ VAT and Employer Compliance (PAYE) representation

What are the benefits of Tax Investigation Insurance?

Get your business covered with tax investigation insurance today to begin to enjoy all of these benefits, as well as peace of mind.

An HMRC compliance check can cost up to £5,000 for a business in accountancy fees and has been known to last up to 16 months.

Tax Investigation insurance covers these costs and gives you advice and support when you most need it.

You will automatically be insured against these costs, and receive ongoing support and advice should a tax investigation be launched by HMRC.

Tax Investigation Insurance FAQ's

How long does a tax investigation take?

For a tax investigation to reach its conclusion the time it takes can vary, however it has been known for a tax investigation to take as long as 16 months.

How far back can a tax investigation go?

Normally, the time limit for HMRC tax investigation is 4 years. However, this can go as far back as 6 years if they can see clear carelessness when submitting your tax return.

How long can HMRC keep an Enquiry open?

If you have filed your tax return on or before the deadline then HMRC has 12 months to notify you that it will be investigating you. However, if you have filed your tax return late, HMRC has 15 months from the date that you filed your return to launch their investigation.

Can HMRC go back more than 20 years?

If HMRC believe that you have been deliberately false in your tax returns then they can go back 20 years.

However, if they beleive that the errors you made in tax return have been innocent then they can go back 4 years.

Sometimes they are allowed to go back 6 years, they will do this if they think that you have been deliberately careless in your tax return.

Can I go to jail for tax evasion?

Yes, in the UK you can face a maximum of 7 years imprisonment with a limitless fine for tax evasion.

Does the taxman check bank accounts?

Yes. Financial institutions such as banks have to make reports to HMRC about the interest paid on things like bank accounts, investments and savings.

They can use this information to make sure that the expenses on your return match with your electronic information.

What is SSP Contra?

If your employee become ill and is unable to work, they may become eligible for SSP (Statutory Sick Pay) which is currently set at £92.05 per week for a maximum of 28 weeks.

However, your organisations sick pay scheme may offer more, it is illegal to offer less.

Company sick pay schemes are also refereed to 'occupational' or 'contractual' sick pay and must be included in the employment contract.

Is it illegal not to get a payslip?

In the UK you must provide all employees with a wage slip. A payslip can also be referred to as an itemised pay statement in legal terms, and must be provided to your employees on or before each of their pay dates.

In the event that an employee is unable to access an electronic version of their pay slip, you must produce a hard copy for them.

Is everyone entitled to sick pay?

If you have been off of work for more than four days in a row, inclusive of non-working days, and are too ill to work, you can get Statutory Sick Pay (SSP) which is paid at £92.50 by your employer for up to 28 weeks.

What must a payslip show?

A payslip must show all of the variable deductions, inclusive of National Insurance, Tax, pension deductions and student loan repayments.

As of February 2018 your payslip must also display time worked and demonstrate that your pay is appropriate and complies with the legal set minimums.

Is it illegal to not get paid on time?

As part of your contract of employment you are entitled to be paid on time.

Moreover, in the event that your employer is consistently late in paying you whilst you are employed by them, you can follow legal procedures to ensure your right to be paid is legally enforced.

In this event it is recommended you contact the citizens advice bureau.

Do employers have to pay sick pay?

In the event that you do not have a company sick pay scheme, your employer will still have to pay you Statutory Sick Pay (SSP), as long as you meet the requirements.

Your employer does not have to pay it for the first three days of illness, unless, within the last eight weeks you have been paid SSP and are eligible for it still. SSP is currently paid at £92.50 per week.