As perfectly and simply described by the Low Incomes Tax Reform Group:
“If HMRC look into your tax affairs, this may be called an enquiry, an investigation, an intervention or a compliance check.
During an enquiry, HMRC ask you questions about your [or “a” for an entity e.g. limited company, trust, partnership, estate etc] tax return. They may also ask to look at some of the documents you have used or will use to complete your tax return. HMRC have the right to ask to see information or documents that they reasonably require for the purpose of checking your tax position.”
HMRC enquiries/investigations can be random or targeted and come at any time, to all taxpayers. A HMRC check or enquiry often does not result in any changes or adjustments and is merely HMRC checking the position however, a taxpayer that is the subject of an HMRC enquiry or check is obligated to respond to and liaise with HMRC.
HMRC activity is on the rise
HM Revenue & Customs (HMRC) activity has increased significantly in recent years, with the number of new enquiries opened now exceeding pre-pandemic levels. Such enquiries and checks are on the increase as HMRC are under even more pressure than previously to reduce the so-called “tax gap” (the measure of the difference between the amount of tax that HMRC deem as being owed and the amount that is collected).
In the recent Spending Review 2025, it was announced that a significant investment (the majority of a £1.7 billion over 4 years) was to fund the recruitment of 5,500 additional compliance staff with the expectation to recover an additional £7.5 million annually by 2029/30. Irrespective of the viability of this, it shows a clear intention by HMRC and the Treasury around further increasing the scrutiny of tax filings.
Why this matters to you
HMRC checks and enquiries can be lengthy and protracted, resulting in the process not being time, and therefore cost, efficient for clients that are the subject of enquiries. Even the simplest enquiry or compliance check (answered in say 2 rounds of simple correspondence – which is relatively rare, the typical enquiry/check requiring multiple rounds of correspondence) requires us requiring time costs of c£1,000 plus VAT.
If you are subject to investigation, we will represent you (as a tax compliance client) and our expertise (both tax technical expertise, and significant experience of dealing with HMRC enquiries) will enable the management of the enquiry to be dealt with robustly and efficiently. You are in very good hands given our tax advisory capability (recently recognised by our Tolley’s Taxation Awards 2025 win and our experience of dealing with HMRC in relation to such investigations).
However, importantly, our normal tax compliance fees do not cover the additional professional costs of handling tax enquiries and compliance checks. HMRC can raise enquiries into tax returns at random, and merely to ask for more detail to check the position upon which the tax return has been filed. Even the simplest of HMRC enquiries can result in fairly significant professional costs. We therefore strongly recommend that you are protected against these unexpected costs by subscribing to our Tax Fee Protection service. This service covers the costs of us dealing with an enquiry/investigation raised by HMRC.
Protect yourself with Tax Fee Protection
Please note that this service has to be renewed annually at 1 June (the service must be renewed to continue the service). If you took out the service for the year-to 31 May 2026, we strongly recommend renewing to ensure that the service is in place, to ensure there is no sizeable gap in the service. Clients should have received correspondence about the renewal for the year 1 June 2026 – 31 May 2027, however, please contact your usual RRL contact if you would like to renew the service.
Cover types and pricing
The required cover depends on which banding you fall into – Personal Tax; Sole Trader; or Company/Partnership. Details regarding the required cover for various types of entities is as follows:
- Personal tax – a director’s/partner’s personal tax is covered where the director’s/partner’s company/partnership takes out the relevant cover. A director’s/partner’s spouse is also covered;
- Sole traders – sole trader businesses with annual turnover of less than £50,000can be treated as personal tax clients. If there is more than one business activity, a further premium for each entity, at the sole-trader fee, will be required if turnover exceeds £50,000 per annum;
- Income from property – a personal tax client who is in receipt of income from property over £50,000 per annum (gross rent) will be required to pay for sole-trader cover;
- Trusts – these will normally be regarded as personal tax clients unless there is trading income within the trust in which case the sole-trader cover should be taken out;
- Company or partnership – the business fee protects both the company/partnership as well as the directors’/partners’ and their spouses personal returns should HMRC enquire into any of these collectively or in isolation. This is on the basis that the director/partner or their spouse does not have any other income that requires payment of a business premium i.e. rents >£50,000 p.a. or any self-employed income >£50,000 p.a.
| Personal Tax | £115 inc VAT |
| Sole Trader | £210 inc VAT |
| Company/Partnership | £420 inc VAT |
Further details
Please find below further information:
If you have any queries regarding which cover you require, please contact your usual RRL contact who will be able to confirm.