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FEE PROTECTION INSURANCE

What do you do if your house is burgled, your car is broken into or you require expensive medical treatment?

You claim on your insurance. That is what it is there for, to give you peace of mind if these events ever occur. Whilst in the majority of cases, we pay our annual insurance premiums without ever needing to make a claim, it is comforting to know that costs that are not necessarily of our making are covered in full.

These are totally unexpected incidents that can happen even if you have good security installed or have a healthy lifestyle and you take out insurance to cover the costs incurred for these unfortunate events.  Imagine if you had to foot the bill where costs can run into thousands of pounds!

WE ALL HATE PAYING FOR INSURANCE UNTIL WE HAVE TO CLAIM FROM IT

The same applies to tax investigations. No-one can predict who will be investigated. You can employ the best auditors, accountants, tax advisors and bookkeepers and yet Her Majesty's Revenue and Customs (HMRC) can still select you or your business for investigation.

TAX INVESTIGATIONS ARE TIME CONSUMING, STRESSFUL AND COSTLY

Investigations can last for many months, even years. During this time you will find yourself incurring accountant’s fees as well as having to deal with costly business disruption and probing questions. Even if you are found to owe nothing you will still have to pay your professional representation fees, which can easily amount to several thousands of pounds. Some enquiries cost substantially more with costs reaching tens of thousands of pounds.

There are an increasing number of HMRC investigations taking place across the UK as the tax authority continues its investigation and enforcement campaigns.

HMRC FACTS

  • £34 Billion

    The estimated tax gap between what HMRC should and does collect.

  • £26 Billion

    The additional amount of annual tax income that HMRC are targeting to achieve through compliance activity.

  • £80 Million

    Spent to develop strategic risk database that automatically generates tax enquiries.

Absolutely no one is immune from these investigations as those being targeted are chosen at random. Having up-to-date tax records and a reputable accountant and tax advisor like Charterhouse will not prevent an investigation and, when it does happen, it can be wide-ranging and very disruptive. In our experience HMRC are very tenacious and fees will rack up substantially. Even a limited enquiry can cost a minimum of £1,000 plus VAT. This can make things particularly difficult for smaller businesses because they are perhaps not so able to fund any defence.

CHARTERHOUSE OFFERS FEE PROTECTION INSURANCE FOR TAX INVESTIGATION

These investigations pose a significant risk to individuals and businesses alike. To achieve the best possible outcome if this happens to you, you need to have professional representation.

RECENT EXPERIENCES

One sole trader paid an insurance premium of £300 and has benefitted from protection against fees in excess of £40,000 due to a protracted investigation.

Another substantial company with turnover in excess of £100m did not take out cover (despite being advised to take out the cover) and is now embroiled in an investigation. Fees to date are in excess of £20,000. The client is now convinced of the need to take out the cover this year!

HOW WE CAN HELP

To protect your business against the cost of an investigation, we strongly suggest that you join our tax investigation insurance scheme.

In the event of an investigation, we will provide all the support you need and deal with HMRC on your behalf (subject to certain criteria).

Without insurance, the cost of dealing with an investigation may run into many thousands of pounds.

Fee Protection Insurance will give you the peace of mind to know that in the unfortunate event that you are selected for investigation you can relax safe in the knowledge that there will be no professional fees to pay.

Our insurance covers up to the equivalent of £100,000 towards our professional fees resulting from an HMRC enquiry.

FURTHER READING

In 2016 the Telegraph newspaper produced an article about HMRC’s £540m small business tax grab. See http://www.telegraph.co.uk/business/2016/07/08/mapped-hmrcs-540m-small-business-tax-grab

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