As HMRC continues to ramp up its compliance activity, more and more individuals and businesses are finding themselves the subject of tax enquiries - often with no indication that anything has gone wrong.
These investigations can be intrusive, time-consuming, and above all, expensive. Even if HMRC ultimately agrees that your return is correct, you will still be liable for any professional fees incurred in defending your position.
This is where Fee Protection Insurance becomes invaluable.
What Is Fee Protection Insurance?
Fee Protection Insurance is a policy that covers the professional costs of responding to an HMRC enquiry. If you're investigated - whether it's a full enquiry into your accounts or a specific point like a capital allowance claim or property income - the fees charged by your accountant to manage and defend your case are covered by the policy.
It's not about tax evasion or errors; it’s about peace of mind. Even the most meticulous taxpayers can find themselves under the microscope simply because they work in a targeted sector or their return triggers an automated flag.
Why HMRC Investigations Are on the Rise
In recent years, HMRC has invested heavily in data analytics and digital matching systems. These tools allow them to cross-reference tax returns with banking data, property records, and other sources. As a result:
Entire sectors (e.g. landlords, online traders, construction workers) are being targeted.
Random checks still take place.
Any inconsistency, however minor, can lead to a deeper dive.
And with HMRC’s staffing pressures and service backlogs, enquiries can drag on for months or even years.
Real-World Examples: What Happens Without Fee Protection?
These are not theoretical risks - they’re actual cases handled by reputable accountancy firms:
🏠 Property Portfolio Under Review
A landlord with several buy-to-let properties underwent a detailed enquiry into how the properties were financed and declared. No tax adjustments were made in the end, but the professional defence required over 20 hours of work and cost the client £5,000 - all out of pocket.
💰 Capital Gains Tax Dispute
An individual sold a property and declared the Capital Gain correctly. However, HMRC questioned the calculation and required detailed substantiation. After months of correspondence, it was confirmed no further tax was due - but the fees incurred in defending the case reached £13,000.
🔨 Builder’s Minor Omission
A self-employed builder omitted a small amount of bank interest from his tax return. This triggered a full review of nine years of tax records. While the underpaid tax amounted to just £1,500, the cost of professional representation totalled over £3,000.
In all these examples, fee protection insurance would have covered 100% of the defence costs, leaving the clients free to focus on their day-to-day without financial worry.
How Much Does It Cost?
Surprisingly little, especially compared to the potential downside. At RiverView Portfolio, our current fee protection premiums are:
We also offer flexible payment options over 3 or 6 months for a small additional fee - making it even easier to budget.
What’s Covered?
Our Fee Protection Service covers:
Full HMRC enquiries into personal, partnership or company tax returns
Employer Compliance Reviews
VAT inspections
IR35 and CIS reviews
HMRC investigations into property income, capital gains, and more
It also gives you access to expert defence from our experienced tax team - with no surprise bills.
Final Thoughts: Can You Afford Not to Be Covered?
HMRC investigations are becoming more frequent, more complex, and more difficult to handle without professional support. Fee Protection Insurance gives you the reassurance that, if the taxman comes calling, you’re not facing a financial battle as well as a bureaucratic one.
If you’d like to arrange cover, or simply ask a few questions, please get in touch - we’re here to help.
📩 info@expat-tax-advice.co.uk
📞 01249 816810
Please note: Our Fee Protection cover applies only to HMRC enquiries within the UK and does not extend to tax authorities in other countries or HMRC equivalents abroad.
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