No one likes the idea of dealing with a HMRC inspection or investigation. Whilst HMRC use the more ‘customer friendly’ term “check”, it comes down to the same process. HMRC want to review and check all or parts of your tax records to ensure you are compliant and paying the correct amount of tax
Well in theory, that’s what they should be doing. Collecting the “right amount of tax” accordingly to the law. Too often though, we see HMRC inspectors trying to claim the maximum amount
What’s at stake?
HMRC investigations do not always uncover problems with tax returns. A proportion of all investigations are selected at random and even after the check, the taxpayer is found to have paid everything that is required. On other occasions, tax may be due. This can be because of minor inaccuracies in the taxpayer’s record keeping, a disagreement on the interpretation of legislation, or a challenge to reliefs or deductions claimed. It may just be that something slipped through the net.
Whether or not tax is eventually due, it is important that enquiries are dealt with in the correct and most efficient way. Particularly because if not, this can lead to:
- Increased penalties if you are deemed to be uncooperative, have poor record keeping practices or HMRC view you have intentionally hidden or disguised you tax affairs
- The tax investigation spreading to other areas of your affairs because the HMRC inspector becomes suspicious or concerned
- Being put on a serious defaulters list which then involves HMRC taking a ‘high risk’ approach to your tax affairs for the longer term.
In addition to all of these, the professional fees for dealing with such an enquiry can be costly and can mount up.
Are you covered?
Wisteria have recently renegotiated our contract with our supplier, Croner Taxwise, in order to provide greater benefit to our clients at a reduced cost.
For a small annual fee of £35 + VAT for individuals or £90 + VAT for businesses, our clients will now be covered for the professional fees in dealing with a tax enquiry. This provides cover at varying levels up to a potential maximum of £100,000.
The coverage includes tax investigations relating to Income or Corporation Tax, PAYE, National Insurance, CIS, IR35, VAT, National Minimum Wage or GiftAid.
What’s not covered?
As with all protection policies, there are some terms and conditions to review and also some specific exclusions including:
- Client who deliberately or unintentionally fail to declare income or expenses on their return correctly.
- Clients who have not engaged Wisteria to prepare the return which is part of the check
- Businesses or groups turning over more than £10m unless specific written agreement is reached with us, as a separate additional fee is charged by the insurer
- Non-trading trusts, Charities and non-profit organisations (although they may not need a tax return)
- Tax returns submitted late.
Are there any other benefits?
In addition to this, clients are able benefit from unlimited access to employment law and business safety advice free of charge. This service is provided by Croner Taxwise and is available on request.
What do I need to do to ensure I am covered?
Wisteria’s will be automatically rolling this out to clients over the next 12 months, although if you wish to get cover in place immediately, please do contact your normal Wisteria contact who will be able to arrange this for you.
More information can be found here