HMRC is intensifying its compliance efforts, making tax investigations more common. In the Spring Statement 2025, the government allocated £100 million to recruit an additional 500 compliance officers, aiming to raise over £1 billion annually in unpaid taxes by 2029-30. As a result, tax investigations are likely to become even more frequent, reinforcing the importance of fee protection insurance.
Dealing with a tax enquiry can be expensive, but fee protection insurance can safeguard you from unexpected costs. Tax manager, Julie Walsh, explains everything you need to know…
What triggers a HMRC investigation?
Tax investigations occur when HMRC identifies discrepancies, risks, or patterns in your tax filings. However, your tax return can also be selected at random, even if everything appears correct. Common triggers include:
- Late or incorrect tax returns
- Unusual account activity
- Large fluctuations in reported income
- High-risk industries (e.g., cash-heavy businesses)
What can HMRC investigate?
HMRC can check various taxes and financial records, including:
- Income Tax
- VAT
- Corporation Tax
- Capital Gains Tax
- Payroll records (PAYE)
Investigations fall into three categories:
1.Aspect enquiry – HMRC examines a specific part of your tax return.
2.Full investigation – A comprehensive review of your tax affairs.
3.Random check – No specific reason, just routine compliance.
Why fee protection insurance matters
Defending an HMRC enquiry can accumulate significant professional fees. Fee protection insurance covers your accountant’s costs, ensuring you receive expert representation without the financial burden. While fee protection insurance does not cover any additional tax found to be owed, it provides crucial financial support by covering the costs of defending your case. This allows you to fully comply with HMRC’s investigation without the stress of excessive accountancy fees.
What if you don’t have fee protection insurance?
Without cover, you’ll bear the full cost of professional fees, which can escalate depending on the complexity of the investigation. These expenses can run into thousands of pounds, adding stress to an already challenging process.
Stay protected
Investing in fee protection insurance ensures you’re not left facing rising costs. At PM+M, we offer a comprehensive protection plan tailored to your needs. Contact Julie today, by clicking the button below, to learn more about how we can help protect you and your business from unexpected tax enquiry expenses.
