What is Tax Investigation Insurance?
Tax Investigation Insurance is a specialised insurance policy that helps individuals and businesses cover the costs associated with a tax investigation conducted by HMRC. Specifically, HMRC conducts these investigations as routine checks to ensure you are paying the correct amount of tax based on your income and financial records.
Reasons HMRC Might Investigate You
HMRC can investigate anyone who submits an annual tax return. Compliance checks ensure that you pay the correct amount of tax and national insurance contributions based on your income.
HMRC can trigger these investigations due to errors or suspicious activity, but they also select them randomly. Even if you maintain accurate records and pay your taxes on time, HMRC can still choose you for a compliance check.
How Can Investigation Insurance Help?
Tax Investigation Insurance provides peace of mind by covering the professional fees and costs associated with responding to an HMRC investigation. Moreover, the average tax investigation can take up to 16 months to resolve and cost thousands of pounds in accountancy fees.
This insurance covers those costs, allowing you to focus on running your business without the added stress of financial worries.
What Does Investigation Insurance Cover?
The coverage provided by Tax Investigation Insurance typically includes:
- Full Enquiry: Comprehensive reviews of your tax return, covering all financial records and accounts.
- Aspect Enquiry: Investigations focused on specific parts of your tax return.
- Business Inspection: Coverage for the costs incurred when HMRC inspects your business premises and records. This could happen with little or no notice.
- VAT and PAYE Compliance: Professional representation costs during VAT, PAYE, and other routine compliance checks.
- Disputes Over Employment Status: Coverage for resolving disputes where HMRC challenges the employment status of your workers.
Do You Really Need Tax Investigation Insurance?
Tax investigations can be disruptive and costly, even if you have done nothing wrong. Therefore, investigation insurance ensures that the investigation process does not financially burden you. Also, it’s a safeguard that helps you navigate an HMRC investigation smoothly, allowing you to continue focusing on your business without unnecessary stress.
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