Kreston Reeves Tax Investigation Service: Essential protection for all clients

The Tax Investigation Service is designed to protect our clients from the professional fees associated with HM Revenue & Customs (HMRC) enquiries.

At Kreston Reeves, we highly recommend this service to our clients, and we have recently upgraded to a new service provider, allowing us to offer a more comprehensive policy package. This new policy covers a broader range of disputes and provides higher coverage for professional fees, ensuring even greater protection and peace of mind. 

The risk of an enquiry from HMRC is ever-present and increasing annually. Our Tax Investigation Service is there to provide support for Kreston Reeves clients. Whether the investigation is triggered by specific risks or chosen at random, even the most diligent taxpayers can find themselves under investigation despite maintaining accurate and complete records. The service includes any compliance check, visit, or investigation started by HMRC. 

The growing challenge of HMRC enquiries

The likelihood of facing an HMRC enquiry has risen in recent years. Covid and Brexit meant many HMRC officers were reassigned to short term projects, however, they are now returning to business-as-usual work. A period of high inflation and worries of a recession always prompts the government to lean heavily on its revenue collector for a boost to the treasury. And now, the very new government brings with it a plan to provide additional funding to HMRC for combating tax avoidance and improving compliance. HMRC’s annual budget has increased to £855 million, up from the £555 million boost announced earlier this spring. This funding is to allow for the recruitment of 5,000 new compliance staff, further increasing the number of enquiries and compliance checks conducted.  

Taxpayers, businesses, and tax professionals widely acknowledge that HMRC is significantly under-resourced. This situation often results in delays and inefficiencies that inconvenience taxpayers and can lead to poor customer service, lengthy disputes, and associated costs.  Our Tax Investigation Service provides insured fees up to £100,000 for as little as £138. 

HMRC’s use of Nudge Letters

HMRC employs various strategies to ensure compliance, including ‘nudge letters’, also known as one-to-many letters. These letters prompt taxpayers to review their tax affairs by highlighting discrepancies HMRC has identified in the information it holds. Although not formal enquiries, nudge letters are a sophisticated tool in HMRC’s oversight arsenal. By using advanced data analysis techniques, HMRC can pinpoint discrepancies in tax records.  

This modern approach marks a departure from traditional tax oversight methods, which relied heavily on random enquiries and risk assessment. Since 2020, HMRC has broadened their use of nudge letters to encompass a wide range of topics, including income from short-term property letting, business asset disposal, and crypto asset transactions. As their data systems improve, we expect to see more nudge letters being issued to taxpayers. 

Our improved Tax Investigation Service includes comprehensive coverage for nudge letters. We fully assess the situation before engaging with HMRC, determining the most appropriate response, and ensuring our clients are well-prepared. 

The increasing risk of HMRC enquiries makes it essential for all taxpayers to have a robust defence strategy. Kreston Reeves’ Tax Investigation Service offers comprehensive protection, ensuring our clients are well-prepared to handle any HMRC enquiries or investigations. By investing in this service, our clients can safeguard their finances and maintain compliance with confidence. 

If you have any questions about the service or would like a quote for taking it out then please reach out to your normal Kreston Reeves contact, email taxdisputes@krestonreeves.com or visit our microsite.