MFW Tax Investigation Service
Important note regarding Covid-19
Given the amount of money the Government has spent on their COVID-19 response, we are anticipating a significant increase in the number of tax investigations as HMRC look to recover some of their spend.
As a result, any business or individual who completes a tax return can be selected at random for an investigation. Regardless of the outcome of an enquiry, the professional fees incurred during the investigations will need to be paid. Our MFW Tax Investigation service not only protects against enquiries into your business, it could also include enquiries into your use of the Coronavirus Job Retention Scheme (CJRS) if this enquiry arises as a result of a PAYE compliance check. Please note, however, that CJRS only enquiries by HMRC’s specialist unit are unfortunately not able to be included.
We understand that HMRC has set up a CJRS task force to follow up some of the 2,000 or more complaints they had had from disaffected employees who were made to work whist furloughed and to to generally check claims of wrongful claiming where funds were not used to pay furloughed employees.
The underwriter for our Tax Investigation Service will cover any investigations as part of a general PAYE compliance check but not for an enquiry into the CJRS claim. This is because any such claims have already been identified by HMRC as non-compliant and that the employer has acted in a non-compliant manner.
It is anticipated, that any claims made under the Self Employed Income Support Scheme (SEISS) that HMRC will have to open up an enquiry in to a tax return and cover should be available. The issue determining this would be whether the claimant’s business really was affected by the coronavirus, or not.
So now more than ever it pays to have protection against a HMRC tax inspection.
How HMRC are tightening their grip
HMRC have been set with ambitious targets and are therefore continually investing in new technology and strategies to maximise tax revenue. They have, for example, collected a total of £3 billion from enquiries generated by their multi-million pound database system, Connect, since 2008, according to a recent report.
Connect allows HMRC to cross-reference information supplied on tax returns with data on individuals’ and businesses’ finances stored elsewhere. It gathers information from multiple public and private sources, allowing for the quick identification of any discrepancies or possible under-reporting.
The system is also allowing HMRC to ‘zoom in’ and keep tabs on taxpayers’ day-to-day activities. Officials can now track ticket sales and passenger information supplied by airline companies, for instance. Particularly striking is the gathering of information from social media. HMRC are now monitoring online posts about holidays, parties and purchases. They may wish to ask questions where they feel a lifestyle does not fit in with an individual’s reported income.
Whilst many of the leads generated by Connect’s collation of wide ranging data are likely to be worth following up, a proportion will be unfounded.
Are you at Risk of a Tax Investigation?
Anyone who submits a tax return can be investigated by HMRC at anytime.
Although we always ensure Returns are filed in a manner that should limit the possibility of an enquiry by HMRC, there can never be a guarantee that it could not happen.
Even if you have done nothing wrong you can still be the subject of an investigation as many HMRC tax investigations are conducted randomly.
What could an investigation involve?
Some investigations will involve a detailed examination of a specific item on a tax return whilst others may extend to a full review of all individual or business affairs. HMRC have the power to inspect business documents and assets at your premises, can ask for documents and information, make unannounced inspections and go back up to six years to investigate matters.
Dealing with a tax investigation is not included in our normal fees and experience has shown that the costs involved can be substantial.
Introducing the MFW Tax Investigation Service
To provide our clients with peace of mind we offer the MFW Tax Investigation Service to help protect against the professional costs involved in a tax investigation or enquiry. Our Service is backed by an insurance policy we have taken out through one of the market leaders, Professional Fee Protection.
We recommend, therefore, that you consider subscribing to our Tax Investigation Service.
Peace of mind providers
It is vital to be led by specialist advice and guidance when dealing with HMRC. We can help you manage any tax enquiries you might receive.
With our Tax Investigation Service our fees will be paid for if HMRC investigate you.
Cover for all
For limited companies and partnerships, our Tax Investigation Service provides inclusive cover for all relevant individuals.
So if your business subscribes to the service, all of your directors (or partners, as appropriate) and their spouses and company secretaries will also receive representation during an investigation into their personal tax affairs as long as we act for the individuals concerned.
For a summary of the protection afforded by our service please download our leaflet.
Frequently asked questions
You can also download a pdf answering FAQs:
For costs of our service and for further details please contact your local MFW office.
Tax investigations can leave you feeling isolated, contact us to find out how we can help.