Every year, HMRC carry out enquiries or investigations into a significant number of individuals and businesses. They do not need a specific reason to start an enquiry or investigation into your tax affairs. Last year, HMRC collected £34.1 billion through tax investigations and enquiries. What’s more, HMRC can target anyone who submits a tax return and their highly efficient ‘Connect’ software is accessing and trawling through financial information right now.
 
83% of tax investigations are triggered by the ‘Connect’ system.
With a budget deficit of over £300 billion, and an investment of over £100m in a taxpayer protection taskforce of 1,265 HMRC staff, we fully expect HMRC to raise more enquiries to increase tax revenue to plug the hole left in the Government’s finances by the economic damage caused by Covid-19.
 
For those who have relied on a Covid-19 support scheme such
as the CJRS (furlough scheme), it is likely that HMRC will be looking a lot more closely at tax returns, payments and compliance history. Tax and VAT repayments will also be checked more rigorously alongside the usual full tax investigations.
Remember, HMRC do not need a specific reason to target a business, it can be despite you having done nothing wrong.
We run a Tax Investigation Service to help protect our clients against the professional costs involved in a tax investigation or enquiry. This service is backed by an insurance policy we have taken out in our own name. We must stress that dealing with a tax investigation is not included in our standard fees and the costs involved can be substantial, this is why we strongly recommend that you subscribe to our Tax Investigation Service.