In the UK we live in an environment whereby the taxpayer is responsible for their own tax liability. HMRC opens investigations to see if the taxpayer has paid the right amount of tax on a random or selective basis. All this helps the government fill its ever expanding public finance black hole.
Dealing with HMRC tax investigations is a daily reality for all UK accountants. Paying for the costs associated with such investigations is, however, increasingly the concern of our clients. That’s why we’ve put together 5 good reasons why you or your firm should consider taking out some form of protection scheme against the costs of an HMRC investigation, should it arise:
The first 3 are about the increasing propensity to be investigated…
- The UK budget deficit has given HMRC the impetus to increase investigative activity over the last few years. One leading insurer now deals with twice the number of insurance claims for the costs associated with tax investigations as it did in 2009.
- HMRC’s appetite for tax investigations has been fuelled by public sentiment: the high profile cases about tax avoidance schemes used by the rich and famous has almost added fuel to their fire and the media – and general public – appear to be backing HMRC’s campaign to increase the frequency and depth of their investigations.
- When it happens, the costs associated can be painful!
Husband & Wife Partnership sold and installed double glazing were subject to a full enquiry. At the initial meeting HMRC alleged the husband had been dishonest. However by the conclusion of the enquiry HMRC deemed that £129 of tax was repayable by the partnership and apologised, confirming the allegation of dishonesty was a case of mistaken identity. Accountancy fees were approximately £5,000.
And now for how the protection schemes can help…
- Protection schemes offer financial protection against the potential cost of accountancy fees that would be incurred in the event of an investigation or dispute with the tax authorities. For a small annual charge, these schemes allow you to leave an investigation in the hands of your accountant, without the worry of being liable for the fees at the end.
- In addition, some protection schemes also offer added value business services e.g. the Dafferns scheme offers the use of a professional Business Support Helpline, staffed by a team of qualified, experienced specialists in the fields of:
- Health & Safety
- Commercial Legal Issues
Sign Up and Protect Your Business
Dafferns offers a tax fee protection scheme.
We now strongly recommend that all our private and business clients join the Fee Protect scheme and we renew client membership every October.
If you would like to join, please contact [email protected]