TALK TO AN EXPERT
Our team of experts are available to talk to Mon-Fri 08.30-17.30 and Sat 10.00-14.00
WHAT IS TAX ENQUIRY INSURANCE?
Tax Enquiry Insurance is a vital insurance policy that protects your business in the event of an investigation into your tax records by HMRC, and any potential dispute that could arise as a result. This policy will cover the costs of a highly experienced legal expert to work your case and fight your corner, taking the pressure off you whilst you concentrate on the job at hand.
Tax Enquiry Insurance – also known as Tax Investigation Insurance – can be extremely valuable to self-employed tradespeople in particular, who are more likely to find themselves the subject of an investigation by HMRC.
You may find that you’re charged thousands in incorrect tax liability charges, penalties and legal bills. Tax Enquiry Insurance gives you access to the tools that could save you money when HMRC comes calling.
What does Tax Enquiry Insurance cover?
Tax Enquiry Insurance will cover up to £50,000 of costs incurred by a specialist tax advisor that is assigned to you in the event of an enquiry or dispute with HMRC, which could include the following:
- HMRC enquiries and investigations – An enquiry by HMRC into the policyholder’s corporation tax or income tax self-assessment return following the issue of formal notification by HMRC.
- Employer Compliance Disputes – A dispute with HMRC following a routine inspection into the operation of PAYE.
- IR35 Disputes - An enquiry conducted into the employment status of the policyholder under the PAYE and/ or NIC Regulations or IR35
- VAT Disputes – An appeal against an assessment or written decision by HMRC. HMRC Pay as you Earn (PAYE) Control Visits – A compliance and/ or control review or routine inspection undertaken by HMRC into the operation of PAYE.
Who needs Tax Enquiry Insurance?
Any self-employed individual or small business can be subject to a tax enquiry by HM Revenue & Customs (HMRC), which can lead to disputes that can cost thousands of pounds to resolve. These investigations can be stressful, costly, and time consuming, so it is important to have comprehensive cover in place to protect your business in the event that you do get investigated.
How common are HMRC Investigations, though? The answer is very – just ask any contacts of yours who are also working as self-employed contractors. Even with no obvious wrongdoing on the part of the taxpayer, HMRC can conduct routine enquiries into tax affairs, and levy fines or charges if they discover any wrongdoing.
Contractors are especially vulnerable to being investigated by HMRC. This is due to changes to rules surrounding off-payroll workers, and the responsibility to determine employment status being with the principal contractor (IR35). However, a significant amount of inspections are conducted at random, with no apparent reason other than to ensure compliance and good business practices. And it shouldn’t go unnoticed that in the 2025 Spring Statement, the government announced a crackdown on tax fraud, aiming to raise an extra £1bn for the economy.
HMRC doesn’t always get it right, but when they make mistakes it’s on the taxpayer to dispute their charges and fight their own corner. Most people are not tax experts, so you might find yourself agreeing to re-classification or accepting to pay charges that you don’t need to pay.
For example, if HMRC disagree with how you have classified sub-contractors, they can look back and potentially re-classify any sub-contractors you’ve used as employees, going as far as to review earlier years and calculate the tax that should have been deducted, leading to massive fees to pay.
As tax legislation might not be your area of expertise, you could end up with an incorrect decision from HMRC about your business status which can mean you end up paying charges for something that you got right in the first place. HMRC investigations can drag on for months, sometimes even years, and it goes without saying that experts working on your behalf for this length of time aren’t cheap. The cost of defending such enquiries can be significant, and it is vital to have professional representation should HMRC come knocking.
TAX INSURANCE COVER SUMMARY
- Specialised personal to defend your case
- Correspondence and meetings with HMRC taken care of on your behalf
- Access to expert tax advice lines for any question you may have
- Cover for limited companies, sole traders, and partnerships
- Multiple levels of cover, from £10,000 up to £50,000
- Instant cover with documents issued immediately
- Monthly or annual payment options
Why is Tax Enquiry Insurance important?
Tax Enquiry Insurance is important because HMRC are at liberty to begin an investigation into your tax affairs at any time. They can carry out checks of your business records at short notice, and will pick over everything, including profits, PAYE payments, Self-Assessments, to National Insurance contributions, Capital Gains, and VAT.
Whether you’re a sole trader, the director of a limited company or part of a partnership, you could be the subject of an enquiry of this type with very little warning.
Being incorrectly reclassified under IR35 or being found at fault for another reason during the investigation can end up costing a small business a massive amount of money, whether it’s paying back years in backdated taxes or appealing a decision in court, the costs involved can be astronomical, and could even be enough to send your business under.
HMRC tax inspectors can go back four years into your records when they identify a genuine mistake, six years in the event of carelessness leading to errors, and if they suspect a deliberate error, they can even look at 20 years of records!
