Are you ready for an investigation?
Are you ready for an investigation?
HMRC is investigating an increasing number of returns, but help is at hand.

It’s an unfortunate reality that submitting your tax return doesn’t always mean you can file it away in the past.

In fact, for the first year after submission, HMRC can decide to launch an investigation into any tax return it chooses. During this random check, it can drill down into your numbers to make sure all is as it should be; whether in one specific area, such as self-employment grants, or more broadly.

These kinds of checks take place within a year, but if HMRC suspects that something is wrong, it can actually choose to investigate a return up to four years after it’s submitted.

It’s easy to understand why this is necessary. HMRC has always been able to check returns, but the Covid-19 pandemic saw a range of support options rolled out for companies and sole traders; many of which were widely abused. In extreme cases, rogue traders created fraudulent companies simply to access loans and grants, take the money, and run.

All this means that the number of investigations carried out has risen in the last two years. And while law-abiding, legitimate traders needn’t worry about the scarier implications of this, getting caught up in an investigation is still a major headache. It’s a process that can take months, with countless queries back and forth – many of which are (frustratingly) repeated or irrelevant.

The level of detailed input that an investigation necessitates means that you really need an expert’s help to handle it. Everyone loves the story of David and Goliath, but in reality, going up against such a big opponent solo would be both stressful and scary. However, given the amount of time that this can take to play out, you could end up facing a huge bill at the end of it – which HMRC won’t compensate you for, even if they find no problems with your return.

Frustrating? Yes. Expensive? Definitely. But this is where we can help.

To protect our clients from this situation, we’re now offering add-on cover for investigations. This now means that for a fixed rate, our fees for assisting will be capped, if this should happen to you. You’ll only pay up to that limit, with everything beyond it taken care of by your cover.

For this, you’ll have a dedicated and – above all – knowledgeable ally at your side, ready to respond to everything on your behalf. Because we’ll have prepared your return originally, we’ll have access to everything we need for your defence, with a thorough understanding of your numbers.

If you’re already a BDA member, you may think that this offers you the same kind of cover, but it’s worth noting that there are a few exceptions. While you’ll have a representative in meetings with HMRC, this person won’t know the ins and outs of your business or tax affairs, and so they won’t be able to offer the kind of details that you’ll need to be ready to supply. To get these, they’ll have to come to your Hive accountant, meaning that – yep, you guessed it – we’ll be involved anyway, but at an hourly rate. Working with the BDA also means just that: you’ll be working with them and fully involved in your case, thereby letting yourself in for a fair amount of stress and hassle.

In this situation, you might decide that it makes more sense to cut out the middleman and come straight to us, so that we can take the whole process off your hands. We’ll liaise with HMRC, provide all of the details that they need, and let you simply get on with running your practice, pain-free.

If you don’t yet have cover, it’s easy to set up. Just get in touch with your Hive accountant, who’ll be able to provide a quote based on what level you need.

The information contained in this article is based on the opinion of Hive Business and does not constitute formal tax advice. Any tax outcomes will be based on individual circumstances, tax legislation and regulation, which are subject to change in the future. You should seek specific advice before embarking on any course of action. Hive Business does not provide regulated Financial Advice, including advice on investment, insurance or lending products or their suitability for you. This article is provided for information only and does not constitute, and should not be interpreted as, investment advice or a recommendation to buy, sell or otherwise transact, or not transact, in any investment including Bitcoin and other crypto. Any use you wish to make of any information contained within this article is, therefore, entirely at your own risk.

By Hayley Robins Senior Accountant
If you have any questions or comments about this article, please get in touch.
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