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Tax Enquiry Insurance


Tax Enquiry Insurance is a type of cover which will protect your business should you find yourself the subject of a tax enquiry or dispute. This insurance will cover the costs of a highly experienced legal expert to work your case and fight your corner, taking the pressure off you while you concentrate on your day job. 

Tax Enquiry Insurance – also known as Tax Investigation Insurance – can be extremely valuable to self-employed tradespeople, in particular, who are more likely to find themselves the subject of an investigation by HM Revenue & Customs (HMRC). 

The bottom line is that you could save tens of thousands of pounds in incorrect tax liability charges, penalties and legal bills with this insurance if and when HMRC come calling.

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What does Tax Enquiry Insurance cover?

Tax Enquiry Insurance will cover up to £50K of fees incurred by our specialists or your accountant in the event of an enquiry or dispute with HMRC, including the following:

  • HMRC enquiries and investigations – An enquiry by HMRC into the policyholder’s corporation tax or income tax self-assessment return following the issue of formal notification by HMRC.
  • Employer Compliance Disputes – A dispute with HMRC following a routine inspection into the operation of PAYE.
  • IR35 Disputes - An enquiry conducted into the employment status of the policyholder under the PAYE and/ or NIC Regulations or IR35
  • VAT Disputes – An appeal against an assessment or written decision by HMRC.

HMRC Pay as you Earn (PAYE) Control Visits – A compliance and/ or control review or routine inspection undertaken by HMRC into the operation of PAYE.

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Who needs Tax Enquiry Insurance?

Any self-employed individual or small business can be subject to a tax enquiry or dispute with HM Revenue & Customs (HMRC). Did you know that tradespeople are more likely to be the subject of a tax investigation than most other professions? This makes this cover a must-have if you make your living as a self-employed contractor.

But just how common are HMRC investigations? The answer is very – just ask any contacts of yours who are also working as self-employed contractors. Even with no wrongdoing on the part of the taxpayer HMRC can conduct routine enquiries into their tax affairs. Contractors are especially vulnerable to this given the changes to off-payroll working (IR35) rules in recent years and the government’s agenda to clamp down on tax evasion in general. However, a good amount of inspections are at random with no apparent reason behind them to ensure good compliance in businesses across the board.

Remember, HMRC doesn’t always get it right and they do make mistakes. As a layperson (e.g. not a tax expert), you might find yourself agreeing to re-classification or accepting to pay charges that you don’t actually need to pay.

For example, where you use sub-contractors HMRC can go through and potentially re-classify your sub-contractors as employees and go back to earlier years and calculate the tax that should have been deducted. However, as tax legislation might not be your area of expertise, meaning you could end up with an incorrect decision from the taxman about your business status which is based on incorrect information. 

Tax enquiry investigations can drag on for months, sometimes over a year, and it goes without saying that legal experts working on your behalf for this length of time aren’t cheap. The cost of defending such enquiries can potentially be significant and it is important to ensure professional representation should HMRC come knocking.  

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  • Renowned experts to defend your case
  • Correspondence and HMRC meetings taken care of on your behalf
  • Access to expert tax advice lines for any question you may have
  • Cover for limited companies, sole traders, and partnerships
  • Instant cover with documents issued immediately
  • Monthly or annual payment options
  • UK telephone support

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Why is Tax Enquiry Insurance important?

Tax Enquiry Insurance is important because HMRC are at liberty to begin an investigation into your tax affairs at any time. They can carry out checks of your business records at short notice, and will pick over everything from profits to PAYE, to Self-Assessments, to NI, Capital Gains and VAT.

Whether you’re a sole trader, the director of a limited company or part of a partnership, you could be the subject of an enquiry of this type without much prior warning.

Being incorrectly reclassified under IR35, or being found at fault for another reason during the investigation can end up costing a small business a small fortune. Whether it’s paying back years in backdated taxes or appealing a decision in court, the costs involved could be enough to sink a contracting business.  

HMRC tax inspectors can go back six years into your business records. If they suspect a deliberate error they can even look at 20 years of records!

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Tax Enquiry Insurance FAQs

Costs vary from insurer to insurer, but at Rhino, we don’t over-charge our tradespeople for this valuable cover.

As usual, Rhino are able to offer very low rates thanks to our scouring of the market to find you the lowest premiums for the most comprehensive cover.

Remember, with Rhino you don’t need to worry about paying more if you choose to pay monthly. We don’t charge our customers monthly interest fees for spreading the cost. 
In short, there is no difference between them – they are simply two slightly different names for the same insurance cover.
Below is an example that may be covered under a Tax Enquiry Insurance Policy: 

HMRC undertook a PAYE review into a building contractor and challenged the status of sub-contractors arguing that they were under the direct supervision and control of the building contractor and there was no obvious right of substitution.  Our experts successfully defended the contractor, pointing to the working practices and successfully demonstrating that the sub-contractors were genuinely self-employed.  The enquiry closed with no additional tax to pay. 
You also get access to our tax advice lines which provides unlimited access to our expert advisors for support on any tax or VAT issues that you or your business may encounter.
The first thing a smart small business owner will do when they realise they’re the subject of a tax enquiry is to bring in the professionals. Hiring quality legal representation is a costly endeavour, and bills for your solicitor or lawyer’s time can quickly reach the tens of thousands. 

Having Tax Investigation Insurance from Rhino Trade Insurance will cover the cost of your legal bills up to a generous £50,000, meaning you don’t have to panic about mounting costs on top of the stress of an investigation.

With your permission, our professionals will also handle correspondence with HMRC on your behalf and offer representation at meetings both online and in person. 

You’ll also get exclusive access to our expert UK-based legal advice lines, which means that any question you have about business tax can be answered by an expert at a time to suit you.

No excess applies to this particular insurance policy. All we ask of you is that you keep your business records to an accurate standard and up to date, you don’t file your tax returns late and you don’t engage in fraudulent activity.

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