Tax Investigation Service

*Richard Grimster, Head of Tax for Price Bailey discussing why TIS is an important service for clients moving forward.

HMRC have been particularly vocal about their wish to close the ‘tax gap’, a £30bn deficit seen each year between the tax they estimate should be collected and what they actually collect. HMRC estimate that around 50% of this figure is underpaid tax by small businesses, of which they wish to considerably reduce.

They note an increase in the number of investigations planned in the coming years which will ultimately impact our clients. The two biggest detrimental impacts of an investigation are the time spent by management on it and the costs associated in progressing the investigation and the defence.

By including TIS as part of our wider services we are supporting our client base through navigating changing times. The Partner team believe that the security provided by TIS will be very welcomed by our client base, who generally have quite simply tax affairs, as they plan for the future.

As a beneficiary of TIS you are not purchasing an insurance policy. Price Bailey LLP have purchased an insurance product directly and allowing clients to benefit from this.

In the event of an investigation by HMRC, subject to it being an investigation covered by the service, the cost of Price Bailey’s time supporting and defending you against the investigation is covered up to the value of £100,000.

At the time you receive correspondence from HMRC, it can be sent to your Price Bailey contact who will gain an initial assessment of the work involved in responding and defence from our Tax Investigations Partner. We liaise with our insurer for you and ensure acceptance is gained prior to any works being completed.

TIS for businesses provides cover for the named entity and associated directors*, provided that Price Bailey prepares or reviews their tax return and they comply with the standard terms and conditions.

No separate service is required, as individuals are covered under the business service where these conditions are met.

*However, if a company chooses to opt out of the Tax Investigation Service, its directors will not be covered for enquiries into their personal tax affairs.

• HMRC has the right under law to inspect your books and records at any time.
• Under Self-Assessment legislation HMRC investigate taxpayers at random.
• HMRC does not have to give a reason for an investigation or have any suspicion; no one is immune from investigation.
• A full investigation is likely to involve HMRC looking at all of your affairs.
• As an alternative to a full investigation, HMRC can raise an aspect enquiry, which will fall short of a full enquiry, but will instead concentrate on one or more aspects of the return.
• The average length of a full investigation is 19 months.
• HMRC estimate there is over £30bn in unpaid tax every year. Not all necessarily fraudulent, they suggest that 50% of this is underpaid by SMEs.

TIS for business provides cover for the named entity and associated directors or members, provided that Price Bailey prepares or reviews their tax return and they comply with the standard terms and conditions.

The amount of cover depends on the type of investigation. A limit of £100,000 per claim applies to the majority of investigations, subject to the terms of the service.

Full and aspect enquiries into:

• Corporation Tax
• Partnership Tax
• Sole trader and personal tax returns

Disputes relating to:

• VAT
• Employer compliance (PAYE, P11D, NIC and CJRS)
• IR35

Use of Information and Inspection / Schedule 36 pre-disputes involving:

• Coronavirus Job Retention Scheme (CJRS) claims
• National Minimum Wage reviews
• Requests for information
• Capital Gains Tax
• Construction Industry Scheme

Sub-limits apply in certain cases:

• Code of Practice 8 enquiries – £15,000 limit
• Appeals for Judicial Review – £5,000 limit

Inheritance Tax enquiries and SDLT / LBTT / LTT enquiries are covered, subject to the overall service limit of £100,000 and the terms and conditions.

Payroll clients are specifically covered for employer-related investigations, including:

• Employer compliance (PAYE, P11D, NIC and CJRS)
• IR35

TIS is designed to support routine HMRC enquiries and compliance checks. It does not cover Civil Investigations of Fraud, Criminal Investigations, Fraud Investigation Service cases, Counter Avoidance Sections, or cases involving suspected fraud.

We understand that this can be an anxious time, with TIS you are able to hand off the initial review to us. First step is to make contact with your usual Price Bailey contact. They will engage our Tax Investigation partner Andrew Park, who will technically review the initial correspondence, consider a response and build a plan to counter.

We will gain acceptance for our professional fees to be covered on your behalf prior to any works being completed.

No, you are not being supplied an insurance product. Price Bailey offer this service to clients and will gain acceptance that fees will be covered prior to starting any works.

Cover may apply to previous financial years, provided that you are an engaged Price Bailey client, we hold a valid 64-8 (authorising us to liaise with HMRC on your behalf), and no HMRC enquiry or communication was received prior to joining the service.

The complexity of your tax affairs does not always directly impact the work or time involved in an investigation. Even an aspect enquiry (an enquiry into a specific area of tax rather than a full investigation) can still take 2-3 months to conclude and require correspondence and data gathering as part of the process.

Yes, HMRC have been very open in their attention on recovering fraudulent or miscalculated COVID grants.

TIS provides cover for Coronavirus Job Retention Scheme (CJRS) investigations, and Self-Employment Income Support Scheme (SEISS) investigations.

A huge amount of information is required as part of these investigations, and due to the speed in which HMRC produced the guidelines some areas are up for interpretation, which can require specialists advice to interpret and defend. TIS allows us to support in collating information and defending your position, without the worry of additional cost.

Yes, HMRC target 300,000 self-assessments for compliance checks every year.

Unfortunately only engaged Price Bailey clients are eligible for TIS. If you would like someone to contact you about the service, then please provide your detail on our enquiry form.

TIS is an addition to your current services. An invoice will be supplied in the same manner as our other services. This can be paid by:

• Direct debit – the most simple with only upfront admin,
• Card – online or over the phone
• BACS – via the account details on the invoice

To pay by direct debit or card please visit our payment site.

No, to be eligible for TIS you need to be an engaged Price Bailey client at the time correspondence is received from HMRC. We also need to be authorised to talk to HMRC on your behalf (hold the 64-8).

If you require further information regarding TIS, you can email [email protected] or call 01279 881 990 and we can clarify any outstanding points.

As auditors we are required to maintain independence from the companies which we audit, meaning we are unable to provide some services to audit clients.

It is at the discretion of your audit partner to what extent we are able to help with an investigation. If we are concerned that our independence may be comprised due to the level of work involved, then it may be suggested that another professional services firm be engaged to complete the work. The third party will engage directly with you, but subject to prior approval, the fees associated covered by TIS on the same terms.

Full terms and conditions explaining what is covered can be read here.

TIS for business, both audit and non-audit clients have access to an additional benefit. A 24hr legal advice line. With 70+ barristers and solicitors available to discuss topics such as:

Employment law

• Recruitment
• Appraisals
• Disciplinary procedures
• Health and Safety
• Workplace procedures
• New legislation
• Health and safety assessments

Commercial aspects including

• Debt recovery
• Complaints
• Business tenancies

Call 0333 920 3499 24/7 365 days a year and be one of 250,000 business owners that are advised by the helpline every year.