Businesses risking costly HMRC investigations
PM+M is warning businesses that they risk financial loss and unnecessary stress if they don’t have adequate fee protection insurance to cover professional fees incurred in unexpected tax investigations.The firm, which works with clients from across the North West and the whole of the UK, recently undertook a survey of over 2,000 businesses looking at how many of them have fee protection insurance. Its findings showed that just 21% of private clients (including partnerships, sole traders and trusts) and 16% of corporate clients were adequately covered.
HMRC tax investigations can be deeply intrusive, time consuming and can drag on for months or even years. If a business is subject to an investigation, significant professional fees can be incurred which means costs can spiral and are in addition to any subsequent tax, interest and penalties which become payable. HMRC is expected to increase the number of tax investigations that it carries out over the next 12 months – both via random selection and industry specific targeting.Some of the most common disputes include: HM Revenue and Customs income tax and corporation tax enquiries, the Construction Industry Scheme, VAT, NI Contributions and PAYE issues. The aim of fee protection insurance is to cover all the costs incurred by specialists in defence of an enquiry from the Revenue authorities.
Jane Parry, lead tax partner at PM+M, said: “Issues around tax have dominated the news agenda for some time now. HMRC has stated its intention to clamp down on non-payment of due tax so the number of investigations is almost certainly set to rise. Any business could be subject to a snap inspection so people shouldn’t put their heads in the sand to the potential risks. Jane added: The authorities don’t always get it right but the onus is on the taxpayer to prove their innocence which can mean huge and unsustainable costs. It’s therefore vital for taxpayers to ensure they’re protected and adequately covered should they get a knock on the door from the tax man. Having fee protection insurance in place gives our clients complete peace of mind that we will be able to spend as much time as necessary to fight their case without it costing the earth.”