If you follow us on Twitter you’ll know that after a busy month answering all your tax return questions in January, we have a ‘no tax talk’ February where the word tax is banned! Luckily we made it through and now we’re almost into the new tax year we’re free to answer one of the scariest questions people ask us:
“Will I get in trouble with HMRC if I get it wrong?”
HMRC have the power to make enquiries into any taxpayer’s affairs – including any tax return. This usually happens if they suspect undeclared income or underpaid tax, but HMRC keep the exact details of how they choose who to investigate to themselves.
HMRC have a high-tech computer system called Connect which can access a massive database of personal and financial information and match this to tax returns to flag any discrepancies.
They will also pick up returns for investigation that they feel are particularly risky. This might be based on behaviour – such as filing late or issues on previous returns. They also use benchmarking techniques to compare results of similar types of businesses.
When HMRC identify an industry with higher potential for discrepancies, they can launch a campaign targeting businesses within that industry. Businesses across all sectors that accept online payments are currently in the spotlight, and previously HMRC have targeted landlords, solicitors, the hair and beauty industry, electricians, plumbers and those with offshore accounts and assets – to name just a few!
A tax enquiry is a major worry for many self-employed people and small business owners. The number of tax investigations is at a record high and HMRC can request to inspect anyone’s records at any time.
Even if your records are in order and you have paid all your tax, the cost of preparing and presenting your case to the taxman can be an unwanted and expensive overhead – but you need to make sure you’ve got a good accountant on your side which is where we come in :)
That’s why we offer all our clients fee protection cover. Our fee protection service gives you peace of mind that our fees will be paid if HMRC choose to investigate you. If you’re unlucky enough to be investigated, we’ve got an expert team here to guide you through the process.
Prices for cover start from just £60 per year.
We are certainly not here to scare you but we've been asked about the insurance quite a lot recently so please contact us if you’d like more information and we can provide a no obligation quote.