Tax Investigation Scheme – Protect yourself!

21st March 2017 Nicky Cole
Tax Investigation Scheme – Protect yourself!

Tax investigations, including investigations into Tax Fraud and Tax Evasion are a real and growing threat to small and medium sized businesses.

On average full HMRC investigations can last 16 months and cost a potential £5,000 in accountancy fees.

How likely is a tax audit or investigation?

You should expect routine tax audits if you are registered for VAT or have employees paid through PAYE.  The tax audit will check your records and systems, focusing on areas where mistakes are common.

Routine tax audits are much less likely when it comes to income tax or corporation tax.  Instead, the focus is more on tax investigations where HMRC have reason to believe you are either making errors or deliberately concealing income.

On average, tax audits can be expected every 5 years or so, while only a few percent of income tax and corporation tax returns are investigated each year.  But the frequency of tax audits and the likelihood of in-depth tax investigations increases if HMRC suspects that tax is being underpaid.  Tax investigations and frequent tax audits are more likely if:

  • You file tax returns late, pay tax late, or make errors that need correcting
  • There are inconsistencies or substantial variations between different returns, such as a large fall in income or increase in costs
  • Your costs are abnormally high for businesses in your industry
  • Your tax returns are inconsistent with how busy your business actually is, or your standard of living
  • You have offshore bank accounts
  • Your have income from property
  • You operate in a high-risk industry, such as businesses that routinely take cash payments, or an industry that HMRC have decided to target
  • HMRC receives a tip-off

In order to protect yourself against the costs of a tax audit, or tax investigation, we would advise you take out insurance which are pleased to offer our clients for the following cost;

Tax Investigation Scheme

(Scheme runs April – March and will be invoiced pro-rata in the first year)

Ltd Company’s and LLP’s £150.00 incl. VAT
Partnership £130.00 incl. VAT
Sole Trader £120.00 incl. VAT
Personal £50.00 incl. VAT

If you already have Tax Investigation Insurance with us, your policy will automatically renew next month.  Please feel free to contact us for further information.

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