HMRC Fee Protection Insurance
What is Fee Protection Insurance and why do I need it?
At All Paul Accountants we understand that tax is a little word with big implications. That is why we work hard to give you the best possible advice and strategies to make tax altogether less taxing.
Any person or business that prepares a Tax Return, whatever the size, may be subject to a tax investigation by H M Revenue & Customs (HMRC). The very thought of an HMRC enquiry can be daunting but, in the event that you are chosen for investigation, we can help you at every step of the process.
Increasingly, HMRC is attempting to maximise the tax it collects by opening enquiries into specific aspects of a Tax Return and compliance checks, rather than full enquiries. With greater powers than ever, HMRC can turn the spotlight on your tax affairs at any time.
We can demonstrate to HMRC that you are paying the correct amount of tax and assist with the investigative procedures. The additional time and flexibility required means that tax enquiry charges are an unavoidable addition to our regular service fees.
To give you peace of mind we offer a tax enquiry Fee Protection service. The service is provided by Vantage Tax Fee Protection, specialist providers of HMRC Protection Insurance schemes to accountancy practices. It is backed by an insurance policy under which we can claim the costs of defending clients in tax enquiries.
We will deal with any correspondence, checks or visits from HMRC and the potentially high costs of dealing with such enquiries will not be passed on to you.
As a client we strongly recommend that you take advantage of this service.
What are H M Revenue & Customs doing?
With the public finances so tightly stretched, HMRC has been set the ambitious target of increasing tax revenues. HMRC have responded strongly by:
Initiating a number of campaigns targeting taxpayers, whom HMRC believe have declared incorrect tax.
Launching a number of task forces, which target certain trades in specific areas.
Recruiting 2,500 new Compliance Officers.
Targeting 20,000 businesses for Business Record Checks each year.
Undertaking more enquiries and Compliance Visits than ever before.
Any taxpayer can be targeted by HMRC to check that they are paying the right amount of tax. Answering all of HMRC’s questions takes time and professional expertise. Enquiries often drag on for months and sometimes take years to conclude. It can cost thousands of pounds to defend you, whatever the end result. Even if you are found to owe no tax, you still have to pay the fees incurred in handling your case.
So what can be done?
It is more important now than it has ever been for you to consider protecting against the unplanned costs that you will incur in the event of an HMRC enquiry or compliance visit. This can be achieved at a relatively low cost.
Complimentary Employment Law and Health & Safety advice
As an added bonus, clients who subscribe to the service will also be able to obtain helpful advice in the complex areas of Employment Law, HR and Health & Safety law as well as commercial legal advice all at no extra cost.
What is covered?
Our professional costs
in the event of the following:
PAYE Employer Compliance Checks
VAT Compliance Checks
Construction Industry Scheme Reviews
Cross Tax Enquiries
Business Record Checks
National Minimum Wage Checks
Student Loan Checks
Employment law advice
disciplining an employee
staff holiday entitlement
managing poor performance
process for dismissal
flexible working requests
dealing with redundancy
Health & safety advice
reporting an accident
Commercial legal advice
Level of cover
Cover for up to £100,000 of fees
Defence by your accountant should you receive an enquiry from HMRC
Can choose to pass the enquiry on to tax experts to better defend you
All professional costs fully covered by our insurance policy
Legal assistance, if required, to go to a Tax Tribunal
Brochures to download
HMRC Claims Incident Rate
Types of HMRC Tax Investigations
A few real life examples of Fee Protection Insurance in use
Without fee protection insurance it would have been almost impossible to justify the professional fees involved in arguing some of the following cases with H M Revenue & Customs and subsequently at a Tax Tribunal
Husband and wife partnership subject to a Full Enquiry
A husband and wife partnership, which sold and installed double glazing were subject to a full enquiry. At the initial meeting HMRC alleged that the husband had been dishonest. However, by the conclusion of the enquiry HMRC deemed that £129 of tax was repayable to the partnership and apologised, confirming the allegation of dishonesty was a case of mistaken identity. Accountancy charges were approximately £7,500.
Retired individual subject to an Aspect Enquiry
HMRC receive information from banks and other financial institutions and compare the information received to the entries on the individual’s self-assessment tax return(s) to check for completeness. As a consequence HMRC commenced an enquiry, inviting an individual to reconsider the information returned as they held information to suggest taxed and untaxed interest had been omitted and understated. The enquiry was concluded with no amendment being made to the self-assessment tax return, with the information supplied by one financial institution found to be flawed. Accountancy charges of £2,000 were incurred disputing HMRC’s findings.
Small business with VAT demand
A small sole trader might have succumbed to paying a VAT penalty demand of £15,000 but for a few hours of quality professional’s time.
Charges of only £250 saved £15,000.
Small business in the wrong category
Mechanical engineer Neil Harris was sure he was right when HMRC challenged his VAT status. The case hinged on Neil’s choice of trade sector when he registered his company for the VAT flat rate scheme. None of the categories on the list supplied by HMRC seemed particularly relevant to his business; so, after taking advice, he registered under ‘Any other activity not listed elsewhere’, with a flat rate of 12%. HMRC decreed that he should have registered in the category ‘Architect, civil and structural engineer or surveyor’ with a flat rate of 14.5%. They demanded tax of £8,891 and a 35% penalty. Neil was looking at a payment of over £10,000. Tax defence charges £1,000s.
HMRC said an individual selling his home was 'trading'
HMRC claimed that when an individual sold his house for a second time within only a few years that he was trading …. and they wanted tax on his gain. The case was successfully defended and no tax payable. The gain was properly covered by the CGT Principal Private Residence Exemption. Accountancy charges £1,250
Elderly widow with £5,000 tax demand
A widow had to use her life savings to pay a tax demand after being hit by a shock tax demand for £5,000 after the death of her husband. The pension scheme had incorrectly given the widow the wrong tax code. The widow had never had dealings with HMRC and had no reason to believe anything was wrong, as every year she paid tax on her other pensions and income. But a few years later the widow was hit with a huge tax bill and revised calculations for the previous six years. HMRC demanded the money in full within four months. Under a tax concession known as ESC A19 the tax should have been written off as the taxpayer had done everything possible to pay the right tax.
Accountancy charges were approximately £1,000.