What is an HMRC investigation?

£35.5 billion is the estimated tax gap between what HMRC should collect and what it does collect. Small businesses and individuals account for over half of this amount.

To ensure tax compliance and to close this gap, HMRC undertakes tax and VAT investigations.

LKA offer a Tax Investigation Service to protect you from the professional costs, stress and uncertainty brought about by an HMRC enquiry. Sometimes known as Fee Protection Insurance, this insurance pays our fees to respond to the enquiry on your behalf.

What prompts an investigation?

Working within a targeted sector, tip-offs from members of the public, or consistently late return submissions are just a few of the ways that an investigation is initiated by HMRC. However, random enquiries into tax affairs can and do happen.

Whether you’re an individual taxpayer or business owner, an investigation is possible, and nobody is exempt.

Any tax return can be selected for an investigation

When you’ve been selected for a tax investigation, the common assumption is that you’ve done something wrong. That’s rarely the case.

You’re strongly advised to engage expert professional representation to ensure a robust response is provided and that the issue comes to an early resolution. Bear in mind that this will come at a cost.

Regardless of the enquiry outcome, you’ll still be liable for the professional costs which could be thousands. Furthermore, it’s not uncommon for investigations to last many months.

We can help

That’s where our Tax Investigation Service comes in to help you. You’ll be protected from the costs of accountancy fees associated with a tax investigation, so you can relax in the knowledge that there will be no additional accountancy fees to pay.

Our annually renewable service provides insurance backed professional representation for up to £100,000 of fees relating to your investigation.

By engaging our professional representation from the outset you can be confident in the knowledge that we have the expertise and experience to deal with HMRC on your behalf, bringing matters to a prompt conclusion.

Our service aims to minimise stress and disruption, save you money, and give you complete peace of mind.

Our Service includes:

£100,000 indemnity with no excess for any compliance check, visit (regardless of whether a dispute has yet arisen) or investigation started by HMRC regarding compliance with:

  • Corporation Tax Self-Assessment
  • Income Tax
  • Self-Assessment
  • PAYE
  • P11D
  • National Insurance
  • Construction Industry Scheme
  • IR35
  • VAT
  • National Minimum Wage
  • Gift Aid legislation and regulations

Also includes:

  • VAT visits
  • Employer compliance visits
  • Check of employer records
  • Interventions
  • Capital Gains Tax
  • Any HMRC use of pre- dispute information and inspection powers under

Frequently asked questions

  • Am I really at risk of being investigated?
  • What happens if HMRC only asks a few questions, will I still be covered?
  • Why do I need this service when I have never needed it before?

View all FAQs

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A request was submitted to consider an HMRC enquiry into a Coronavirus Job Retention Scheme (CJRS) claim. The fees were authorised for the accountancy practice to respond to HMRC. There were no errors found and fees paid to handle the enquiry totalled many hundreds of pounds.

A sole trader cafe was subjected to a tax enquiry. The enquiry ran for 34 months and resulted in no amendment being made to any of the tax returns. The cost of the professional fees, however, was £19,000.

HMRC opened an enquiry into a VAT return. The information requested by HMRC was detailed transactions, amongst other information, which ultimately resulted in a repayment from HMRC. £1,800 in accountancy fees were paid in full.

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