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Why do I need Tax Enquiry Fee Protection?

Why do I need Tax Enquiry Fee Protection?

Due to the Covid-19 pandemic the UK Government have been forced into spending approximately £317.4 billion during the 2020/21 financial year in the fight against the virus.  This has led to the UK now facing a peacetime record high level of national debt.

This debt is being further compounded by the Government not being able to raise as much tax as it was pre-pandemic. The Covid-19 pandemic has caused major damage to the economy with millions of people either being furloughed or out of work entirely.

As a result, HMRC are taking extensive action to recoup as much revenue as possible to begin to ease the level of national debt and we have already begun to see an increase in the number of enquiries opened by HMRC for both individuals and businesses alike.

There are 3 main types of enquiry HMRC can launch:

  • Full – These are usually launched when HMRC believe there is a significant risk of error or misinformation.  They typically take a comprehensive review of the accounts and tax return.
  • Aspect – These enquiries look into a particular part of the accounts or tax return where HMRC expects an error generally caused by straightforward mistakes.
  • Random – As the name implies, these are issued randomly to anyone who has submitted a tax return, often there are no errors and nothing to worry about but you will still need to produce evidence to support your submitted accounts and return.

Due to there always being the possibility of being selected for a random enquiry from HMRC, as a firm we see our Tax Investigation Service insurance as fundamental to ensure you are protected against a potentially expensive enquiry.

If you are selected for a tax enquiry we will naturally aim to settle it quickly and minimise the final tax liabilities.  However, answering all of HMRC’s questions takes time and can drag on for many months. For a small annual fee you will be protected against potentially far greater costs for the time involved in settling your enquiry.

For more information please visit our webpage or contact us to discuss further.

Carl Biggins, MAAT, March 2021

30-03-2021

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