Tax Investigation Protection cover: the protection the FSB offers
Our members receive outstanding tax protection through tax advice given by Revenue-trained specialists and this is one of the most important benefits of FSB membership.
Without the right protection a tax investigation can hit your business hard, since the average accountancy fees charged to handle HMRC enquiries can cost anywhere between £2,000 and £5,000 and that's before you've even considered any extra money owing to HMRC.
Under the FSB's Legal Protection insurance scheme, our tax experts are all former tax inspectors who act as your representatives in the enquiry. This includes, where necessary, liaising directly with your accountant. If they need your accountant to do any work, a fee for this work is agreed and it is covered in your policy.
Tax investigation protection: not just for big firms
HMRC can investigate a business at any time, even years after it has closed. On average, an investigation takes around 16 months.
If you thought HMRC only targeted big businesses, think again. In 2011, 33% of the HMRC enquiries handled for members related to business with a turnover of under £150,000 and 71% of these had a declared profit of under £25,000.
Membership of the FSB give you immediate professional support and essential protection for tax matters.
A PAYE Compliance Review commenced in June 2009 lasting 2 years. HMRC were largely happy with the payroll records, but concerned about the reimbursed mileage costs paid to salesmen. HMRC said that the expenses should have been taxed, which would have given rise to a liability of circa £50,000.
The position was defended through FSB's tax protection service and following a review by a Technical Specialist, HMRC conceded that their interpretation was incorrect.
- The review lasted 2 years.
- The costs for defending the member were £3,800.
- There was no additional liability.
The enquiry into a Bed & Breakfast began in September 2010 and ended 9 months. The business declared turnover of around £150,000 and a healthy profit,yet the HMRC still selected it for enquiry. Luckily, it was protected for tax investigations.
- The enquiry lasted for 9 months.
- It cost around £2,000 to defend the member.
- A small liability arose in respect of an unrelated Capital Gain.