Tax and VAT investigation cover

What is it?

If HMRC decide to investigate your self-employed income, we will take as much of the worry away as possible. As well as the support members receive from the tax and legal helplines, if your tax affairs are investigated by HMRC, IPSE will provide you with a specialist to represent you in all HMRC compliance checks, and financial cover for professional fees.

For IPSE Freelancer, Umbrella and Director members we will provide a specialist to deal with your tax investigation should there be a dispute with HMRC. The specialist will handle all correspondence with HMRC at no cost to you.  

Many investigations can be stopped before they have the chance to begin, so Director members also have the entire HMRC compliance check handled from the first letter to your door, right through to tribunal, if necessary. Specialists at Markel will draft a response to the initial notification from HMRC removing the stress and minimising the risk of responding incorrectly. If HRMC want to proceed with the check, IPSE will represent you at no cost. 

IPSE Director members can also receive up to £500 per day compensation for tax compliance meetings up to £1500, as per your contract at the time. For Freelancer members, this cover is for up to £250 per day, up to a maximum of £750 per member. For all IPSE insurances, please read our T&C's. 

 

This benefit of IPSE membership kicks in if HMRC is investigating one or more of your tax return submissions, and has determined that you owe money. This will typically take the form of either a Full or Aspect enquiry into: Corporation Tax Returns, Partnership Tax Returns, Sole Trader Tax Returns, or Personal Tax Returns. Income tax and Corporation tax are both covered under this benefit to ensure that sole traders and limited companies alike are protected.  

What is an Aspect enquiry? 

An Aspect enquiry is when HMRC is investigating one or two aspects of your tax return. Typically, HMRC will be looking for clarification on your entry for the aspect in question by requesting evidence or asking further questions. 

What is a Full enquiry? 

A Full enquiry is when HMRC are dissatisfied with the tax return as a whole. It involves checking the whole return, and typically the business accounts. While this is rarer than an aspect enquiry, it can typically occur when HMRC have used software to compare your returns against other companies in your industry.  

What is a dispute? 

Following an initial check of your tax return, if HMRC is still dissatisfied with your return, it will be looking to recoup the tax it is believed you owe. You'll know that a dispute has begun if you are asked to complete a Working Practices Questionnaire. 

What could HMRC be investigating? 

For example:

One case that was covered through IPSE membership and taken to tribunal would have normally cost the member around £75,000 without this service. While this case is on the higher end of what we typically see, on average these investigations cost around £5,000-£6,000. That’s the equivalent of one year of Director membership fees, 15 times over. 

Run-off IR35 enquiries cover

IPSE Umbrella members also have access to Run-off IR35 enquiries cover which provides up to £25k indemnity for representation to deal with an enquiry by HMRC into the application of the IR35 legislation. Members who have previously operated via a limited company but now provide their services through an umbrella can rest-assured that they are still protected for historical contracts. 

Run-off cover is not included in Director membership because as a Director member you have IR35 investigation cover included in the overall tax investigation insurance.

Tax pre-dispute cover

Lots of HMRC tax investigations can be stopped before they start. Before an investigation starts, typically your tax affairs would be checked by HMRC to make sure you’re paying the right amount. They will get in touch with either you or your accountant to say what they want to check. This could be:

• any taxes you pay
• accounts and tax calculations
• your Self Assessment tax return
• your Company Tax Return
• PAYE records and returns, if you employ people

IPSE Director members are covered from the point that this initial notice is received, and IPSE will try to stop the investigation before it becomes a dispute. Any time spent on this by our specialists will be covered by your membership. 

How does it work?

IPSE's specialist insurers, Markel Direct, will draft a response to the initial notification from HMRC removing the stress and minimising the risk of responding incorrectly. If HMRC want to proceed with the check, IPSE will represent you at no cost. Any time spent by Markel's specialists on this letter response is completely covered by membership. 

If you are an IPSE Director member and receive a compliance check letter from HMRC, you can make a claim via your member dashboard on the IPSE site. Once you've made the claim, you'll be assigned a specialist to handle your claim. Many of Markel's specialists are former HMRC employees, which means they are very familiar with the procedures involved and are experts in this field.  

The specialist will ask you to complete a questionnaire and will follow up with a phone call where you can discuss your contract and working practices, to ensure that they understand as much about your individual circumstances as possible. They'll then be able to put together a response letter to HMRC, highlighting the important elements of your contract and any other relevant information.  

This entire process could typically cost anywhere from £500 - £1500, but is covered by IPSE Director membership. 

If you are an IPSE member and you receive any correspondence from HMRC that you aren't sure about, we recommend you contact the Tax helpline as soon as possible.