Tax investigation insurance protects your business from the costs of a tax investigation.
It is one of many means by which small business owners, contractors, freelancers and landlords should be considering to maintain financial stability. However, it is also an additional expenditure that you will need to assimilate into your overall cash flow. So you need to make sure the outlay will be worth it.
HMRC can select your company tax records for investigation at random. They may also make a decision based on a suspicious tax return.
Even if all your records are in order, the investigative process can be complex, last up to 16 months and cost as much as £5,000 in fees.
Depending on your provider, tax investigation insurance will cover these fees and give you access to beneficial support services, such as:
- Tax advice helpline
- Representation from former tax inspectors in HMRC communications
- IR35 legislation support
- Corporation/Income Tax full and aspect enquiry protection
- PAYE/VAT representation
These services could prove invaluable in keeping your business stable in the event of an unexpected tax inspection.
Why keeping accurate financial records is key
Calling on a specialist accountant can’t stop you being selected at random, but having accurate financial records will help to expedite the process.
Use advanced accountancy software in tandem with your accountant to give HMRC everything they need to conclude the investigation quickly. That way, you can get back to focusing on your core operations.