close
Get Started Today

Please fill out the form below and a member of our
team will be in touch with you soon.

    Tag: HMRC Enquiry

    Protect yourself or your business with Tax Enquiry Fee Protection

    Posted on by Rebecca Campbell

    This year, our Tax Enquiry Fee Protection Service will be mailed to eligible clients by post during the month of February 2026. Be sure to look out for it – this could save you significant stress, time, and money.

    HMRC enquiries are becoming more frequent, and while this isn’t unexpected, it can be both challenging and costly to deal with. Even if no extra tax is due, the professional fees to resolve an enquiry can still add up quickly. That’s where our service steps in.

    With our Tax Enquiry Fee Protection Service, you’ll benefit from:
        •    Expert representation from trusted professionals when HMRC comes calling
        •    Peace of mind that professional fees of up to £100,000 are covered
    •    Complimentary access to My Business Hub – a digital business toolkit and HR advice service

    This is more than protection — it’s a safeguard for you and/or your business, your finances, and your peace of mind.

    Keep an eye out for the full details arriving in the post shortly. Don’t miss this chance to protect you and/or your business from the unexpected.

    In the meantime, you can find more information here, or contact us by emailing feeproreplies@pmm.co.uk

    Fee Protection Insurance: what is it and why do you need it?

    Posted on by Rebecca Campbell

    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.

    The importance of record-keeping for R&D claims

    Posted on by Rebecca Campbell

    In October 2023, HMRC introduced updated guidance on record keeping for R&D claims, emphasising the importance of thorough documentation. This approach not only facilitates smoother interactions with HMRC but also ensures you capture all eligible costs, maximising your entitlement to R&D relief.

    Identifying qualifying projects

    Maintaining records that clearly identify projects eligible for R&D relief is crucial. This helps ensure you don’t miss out on claiming relief for qualifying activities. Keeping timelines for each phase of a project can be especially beneficial, as they are often requested during compliance checks and provide clear evidence of the project’s scope and duration.

    Identifying qualifying costs

    Accurate cost recording is essential for R&D projects, covering both direct and indirect costs related to qualifying activities. Be prepared to provide clear explanations for any estimates or apportionments made, supported by evidence and reasoning. Additionally, be ready to justify any sampling methods used and their appropriateness.

    When to keep records

    Starting record keeping from the beginning of a project is considered best practice. While the nature of records may vary, comprehensive written documentation significantly accelerates the AIF submission and review process in the case of a HMRC enquiry.

    In the absence of written records, a detailed explanation may be sufficient in some cases. Be prepared to provide thorough explanations of your claim, including but not limited to:

    • The uncertainty to be overcome
    • When the uncertainty was identified
    • When the uncertainty was resolved
    • The field of science or technology involved
    • The nature of the advance made
    • Why it was an advance in the field
    • The method or plan to achieve it
    • The steps taken
    • How you determined the qualifying costs

    Evidence of a project

    HMRC may request various documents during compliance checks, therefore it is essential to collect and retain such evidence to support your claims effectively.

    Examples of requested documents include:

    • Project charts and plans outlining the project’s scope and timeline
    • Design documents, drawings, or prototypes illustrating the development process
    • Test results demonstrating the outcomes of research and experimentation
    • Meeting minutes or email exchanges documenting project discussions and decisions.

    These documents not only serve as evidence of the project’s existence but also provide insights into the nature and scope of the R&D activities undertaken.

    Get in touch 

    By adhering to HMRC’s guidance and maintaining comprehensive records, you can unlock the full potential of R&D tax relief whilst navigating the process with confidence and accuracy. If you have any questions or need assistance with planning or implementing a record-keeping process, get in touch with corporate tax director, Claire Astley, by clicking the button below.

    R&D claimants: are you prepared for a HMRC enquiry?

    Posted on by Rebecca Campbell

    Over the years, we have seen many R&D providers boast about their 100% success rates and HMRC approved processes however, in truth, R&D is no different to other areas of taxation. There is always the possibility of a HMRC enquiry.

    With error and fraud in R&D costing the taxpayer an estimated £1.13 billion, HMRC introduced the mandatory additional information form in August 2023 to create uniformity in the submission process. Since this introduction, it is estimated that 1 in 5 claims are reviewed in more detail by HMRC.

    Common trends

    There isn’t a set list of red flags that prompt an enquiry however, there are some common trends.

    • Claims originating from sectors with traditionally lower R&D intensity: This situation can raise suspicion and prompt HMRC to investigate further.
    • SMEs in receipt of funding: HMRC frequently encounters errors in this specific area which has led to additional scrutiny.
    • Substantially high claim value: If your claim value is significantly higher than the average tax savings or exceeds previous R&D claims by a large margin this could prompt an enquiry.
    • Deadline submissions: Claims submitted on the deadline are more likely to be subject to scrutiny as they may contain errors due to time limitations and a lack of supporting documentation.

    How to prepare

    While certain enquiries may be targeted based on risk or sectors, others can be completely random. As a result, it is impossible to entirely avoid an enquiry. However, you can take steps to minimise the associated risks by ensuring your claim provides HMRC with all the details needed to carry out a proper assessment.

    Should HMRC enquire into an R&D claim, it is important to:

    1. Provide detailed documentation: one of the most critical aspects of preparing for an HMRC enquiry is maintaining comprehensive and accurate documentation. Keep detailed records of all R&D activities, including project plans, technical specifications, research notes, and financial documentation. This documentation will help support your claims and demonstrate the eligibility of your R&D projects.
    2. Understand the R&D guidelines: familiarise yourself with the guidelines provided by HMRC for R&D claims as a whole. Ensure that you have a thorough understanding of the eligibility criteria, qualifying expenditure, and documentation requirements. Staying up-to-date with these guidelines will enable you to make informed decisions and avoid potential pitfalls.
    3. Maintain strong communication channels: maintaining open and transparent communication channels with HMRC is crucial. If you have any uncertainties or questions regarding R&D claims, seek clarification from HMRC directly. Proactively engaging with HMRC demonstrates your commitment to compliance. It may seem like an obvious step, but you would be surprised how many companies miss the response deadlines. Maintaining compliance is crucial for fostering a strong relationship with HMRC. If you require additional time to respond, it is important to request an extension from HMRC and keep them informed throughout the process.

    Get in touch

    If you are concerned about how prepared you would be in the event of a HMRC enquiry into your R&D claims, get in touch with our R&D experts who will help you identify any potential areas of risk and provide tailored advice specific to your individual circumstances.

    Contact corporate tax director, Claire Astley, by clicking the button below.