Insure your business against a tax inspection

Back in November 2009 we wrote about how the Inland Revenue has changed the way it conducts tax inspections. A few months on and we are finding that more and more clients are being contacted directly by the HMRC.†

As the HMRC continues to increase the frequency of tax inspections, we’re working to protect clients by making sure accounts are in perfect order and they are insured against the potential costs associated with an inspection.

Enquiries can be raised for a number of reasons linked to the type of business, a technical issue or as part of a random selection. The HMRC has created a dedicated team called the Targeted Education, Enabling and Leverage (TEEL) to investigate these enquires. They can:

• Give you seven days written notice that they will visit you to review current year records.
• Request non-statutory books and records, such as appointment diaries.
• Inspect business premises and assets without acquiring a warrant .
• Review books and records for a year that you have not yet reported. Any errors (even innocent oversights) found will be used to calculate the potential loss of tax for the whole year (even though the year is not complete) and penalties will be charged accordingly.
• Conduct real-time interviews of how you are operating PAYE or the CIS.

Failure to comply with an information notice will result in ongoing penalties, plus a tax geared fine of up to 100% of the additional tax due could also be issued at the end of an enquiry.

What you should do

If HMRC or their TEEL team make contact with you, including an unannounced visit, call us immediately for advice as it is no longer their policy to notify your accountant first: please do not assume that they will be aware of the situation. In addition to our tax advisory service, we are also offering an insurance policy which will limit the accountancy fees associated with a tax enquiry.

We will be happy to discuss any of the issues raised in this letter in detail with you - please call our Tax Advisory Team on 01245 495588.