HMRC Tax Investigators are Back!

Since the first official lockdown, reports indicated that HMRC had adopted a go-slow approach or, in some cases, placed current tax investigations on hold due to COVID‑19. However, HMRC have now confirmed that, due to the pandemic, they have adapted to the fact that many of their employees are working from home and restarted probes into businesses’ and individuals’ tax affairs.

Due to these new reports, we would advise that our clients subscribe to our RBP Tax Investigation Service (TIS) policy service which aims to insure our clients against additional accountancy fees being incurred should an investigation arise.

Many of our clients ask us what can initiate an investigation. The answer to this is that there can be several triggers, some of which are beyond your control. For example, HMRC will target specific sectors or your practice might just be randomly selected.

There are three main types of enquiry:

• Random enquiries, as mentioned above
• Aspect enquiries, this is where the HMRC suspects an error. These are often commenced due to small mistakes rather than deliberate attempts of tax evasion
• Full enquiries, which usually occur if HMRC believes there is a significant risk of error.

When an investigation is started, HMRC write to us raising a query relating to your tax affairs. We will then write to advise you that an enquiry has commenced. At this stage, we cannot estimate how much time will be required to undertake this additional work. However, in recent experience, the additional accountancy fees for dealing with investigations have ranged between £750 to £5,000 plus VAT.

The RBP TIS avoids these additional accountancy fees. How? When the partnership and its partners (if we act for them personally) are subscribed to this service we, RBP, add them to our policy held with PFP, a protection fee company. Should they then be investigated, PFP will settle any invoices we raise for any work carried out on their behalf to resolve the matter with HMRC.

The scheme runs from 1^st April to 31^st March each year (this year it is running for an extended period from 1^st March 2021 to 31^st March 2022, as we have changed the year end to correspond to the tax year) and costs from £89.50. If you would like to subscribe, please email Danielle at danielle@rbp.co.uk and we will provide you with the pro-rata cost for the remaining year to 31^st March 2022, a full summary of the service provided and the forms for you to complete.

In the meantime, if you would like further information please click here to visit our dedicated website and the RBP Tax Investigation Service.