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Tax investigation protection and IR35 insurance

October 11, 2010

Tax investigation insurance will protect you in the event that an enquiry is made into your tax return, or via a PAYE compliance visit. In some cases, this could result in a Tax Tribunal (formerly Commissioners’ Hearing).

Clearly, the costs of defending yourself during an investigation can be substantial, and for this reason, many small business owners and contractors take out tax protection insurance.

Contractors and freelancers, in particular, often take out cover to protect them in the event of an IR35 dispute.

Policies of this type are not expensive, and ensure that all representation costs are covered by the insurer. It’s possible to get cover for a little over a hundred pounds per year, including cover for retrospective tax years.

When you compare that to the potential costs of paying accountants and solicitors to help you defend an investigation, you quickly see why more and more business owners are taking out tax investigation insurance.

IR35 Insurance – What is included?

Tax protection covers a wide range of possible tax disputes, including IR35 insurance.

The cover provides full expert representation in the case of PAYE compliance reviews, and covers representation fees of up to £50,000 in the defence of:

  • IR35 disputes
  • PAYE or NIC disputes
  • VAT disputes
  • Section 660 enquiries
  • HMRC aspect enquiries or full enquiries

How do you take out tax investigation cover?

There are a raft of companies providing tax investigation insurance. Before you take out a policy, compare a few providers and go with the one you feel most comfortable with. Remember the policy with the lowest premiums, may not be the best policy.