Bournemouth firm offers free tax investigation insurance as claims increase 15% year on year
Stats show more small businesses and sole traders are asking for advice on HMRC investigations
Saves clients up to £150 per annum, protecting them from HMRC audit
Smart Accountancy Systems now offers free insurance to its existing and any new clients
There can be nothing more chilling for a small business or sole trader than a letter from HMRC asking to investigate the books. Unfortunately, this seems to be on the rise, despite Government assurances to support small firms in Bournemouth and beyond.
Advice firm Taxwise notes ’a clear [upwards] trend in the activity of HMRC’, not only over the last few years but also a seasonal trend within each tax year. Of course, activity is unrelenting, with one of the key focus points being small businesses and sole traders.
In 2013/14 Taxwise received over 6,000 claims, an 15% increase on the year before.
Amazingly, many companies baulk at the idea of having insurance for a HMRC audit and often chose to face the taxman alone. As well as causing stress and hours of admin, this can also lead to further investigation and an unexpected bill if HMRC do not go away assured everything is in order.
“It’s all about having the right mindset,” said Jon Jenkins of Bournemouth-based Smart Accountancy Systems. “Tax Investigation Insurance (TII) may cost £150 per annum but how much could an investigation cost you, if not handled by an expert? Most of my clients saw it as an unnecessary add on so, as of August this year, we’ve decided to add it to all of our packages free of charge.”
Now all Smart Accountancy Systems clients are covered for the time spent dealing with an investigation.
Jon himself agrees that he is seeing more HMRC investigations and has dealt with investigations for almost 7% of his client base – a considerable amount. “Even when firms have had a letter and come to me to discuss it, they quite often decide to take it on themselves.
“This is so stressful – HMRC may come to your home, they take note of everything from your holiday photos to the cars in the drive and they ask questions you might not know the answer to.
“It all comes down to productivity – is this the best way to spend your time when you could be out winning new business?”
So insurance has a dual purpose – piece of mind and economic sense. Don’t underestimate an investigation – HMRC can charge a penalty of up to 100% of the error in addition to the undeclared amount and the effects could be life-changing.
“Offering TII for free started only this month but, for us, it makes sense,” Jon said. “How can we serve our clients needs properly if we are not prepared for, not the inevitable, but certainly something that’s becoming more and more common?
“For a small businesses, handling an investigation properly could be the difference between survival and going under.”
Jon is happy to offer advice and further information for Bournemouth businesses concerned about the heavy hand of the tax man – call 01202 577500.