New HMRC powers could lead to costly investigations
LONDON.-UK companies could face additional, unexpected accountancy fees due to new tax investigation powers from HMRC. In response, Aon Professional Services Group is helping accountants offer their clients a cost effective insurance service that will meet the professional fees incurred in an investigation. Equally, the product will give clients peace of mind that they won’t have to scrimp for additional accountancy fees.
HMRC has already increased penalty levels and has introduced the concept of reasonable care, where a penalty may be waived or increased. In practice this means that tax enquiries are likely to be more drawn out and therefore cost more to deal with. From 1st April HMRC can now also enter a business premises without warning to inspect the business records and premises. These new intervention powers may cause great difficulty for businesses to respond to in the correct way without professional assistance.
The insurance cover works by the company or individual client signing up to the Accountants Tax Investigation Service. In the event of an investigation the accountant can claim back the fees from the insurance policy. The insurance will pay up to £75,000 subject to policy terms and conditions, towards accountants’ fees in the event of a tax investigation for Full Enquiries, VAT, PAYE or NIC disputes and Aspect Enquiries. Cover can also be provided to deal with the new intervention visits.
Tax investigation insurance has been deemed best practice by the Institute of Chartered Accountants in England and Wales, as part of an added value service to clients from their accountant. Simultaneously, the profession needs to dispel the popular myths held by taxpayers that they will only be investigated if fraudulent or if their accounts are out of order.
Luke Hamm at Aon Professional Services Group commented: “In flourishing times, accountants may waive or reduce fees to help clients with HMRC investigations, but now accountants have less flexibility and need reassurance that they will be paid for their advice. At the same time, it’s crucial that accountants are prepared to support their clients if they are subject to an investigation and demonstrate the added value they can bring.”
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