HMRC is checking more businesses than ever. Here’s how we protect you from the cost.

Tax minister: “we are coming for you”

Source: https://www.gov.uk/government/news/tax-minister-to-owners-of-dodgy-shops-we-are-coming-for-you

In June 2026, HMRC announced a major expansion of its tax enforcement.

By its own figures, it will carry out more than 30,000 interventions across UK businesses this year, supported by 350 new criminal investigators and a £30 million cross-agency unit.

You don’t have to be doing anything wrong to be selected.

HMRC's own figures now point to smaller businesses. They account for 62% of the UK tax gap for 2024-25, which is the difference between the tax that is owed and the tax that is collected. And the biggest single cause of that gap is not fraud or evasion, but simple failure to take reasonable care, which accounts for around 35% of it.

Most of what HMRC is looking for, is honest mistakes, exactly what a routine enquiry is designed to find.

HMRC also chooses many of its cases automatically. Its Connect system compares more than 55 billion data points, from banks, online platforms and the Land Registry, against what businesses report, and flags anything that looks unusual. Around 7% of enquiries are opened at random, so a business with accurate, well-kept records can still be selected by chance.

Being in the right doesn’t make it free.

This is where the cost comes in. Once HMRC opens an enquiry, it must be answered properly, even if you owe nothing at the end of it.

That means correspondence, gathering and sending documents, meetings, and putting the technical arguments to HMRC on your behalf. A short enquiry might be settled in a few months, but a full enquiry often runs for a year or more, and a complex case longer still.

This is specialist work, outside your usual accountancy fees, so even a straightforward enquiry can add up to a bill of several hundred pounds.

So, you can be entirely in the clear, owe nothing extra in tax, and still be left with a bill for proving it.

This is exactly what our Tax Investigations Package is there to cover.

How the Tax Investigations Package removes that risk

For a small annual subscription, the Tax Investigations Package works like this. If HMRC selects you, we deal with them on your behalf, and our fees for handling the enquiry are covered under our own policy, up to its limits.

You are liable only for any tax you genuinely owe.

In practice, that means:

• Nothing changes in how you run your business.

• Our time is covered, so you do not receive our bill for it.

• You have the peace of mind that being selected needn't turn into an unexpected cost.

What’s covered (Full policy terms and conditions are available on request.)

The service provides fee protection of up to £125,000 towards the professional cost of dealing with HMRC on your behalf.

Full and aspect enquiries into:

• Corporation Tax, and into company, partnership, sole trader and personal tax returns

• VAT inspections and disputes

• Employer compliance covering PAYE, P11D and National Insurance

• IR35 and Code of Practice 8 (COP8) enquiries (£5,000 limit of indemnity)

• Inheritance Tax enquiries (£5,000 limit of indemnity)

HMRC information and inspection powers/Sch. 36 Pre Disputes up to a limit of £125,000 in respect of:

• VAT reviews and inspections, employer compliance visits, checks of employer records,

• National Minimum Wage reviews, and requests for information

• Coronavirus Job Retention Scheme (CJRS) and Self-Employment Income Support Scheme (SEISS) claim checks

• Capital Gains Tax, Gift Aid and HMRC compliance audits

• Construction Industry Scheme (CIS), SDLT, LBTT and LTT enquiries (£5,000 limit of indemnity)

What this means for your sector:

The sectors HMRC's expanded teams are looking at most closely are the ones we know best.

• Agriculture and farming. Grants, diversification income and capital allowances make for a complex return, and complexity draws questions.

• Tourism, hospitality and leisure. Seasonal, cash-influenced income and mixed VAT treatments sit right in HMRC's area of interest.

• Construction and trades. Subcontractor arrangements carry real exposure under the Construction Industry Scheme and around employment status.

• Retail. Day-to-day cash takings and high transaction volumes are exactly the pattern the current campaign is built around.

• Professional practices. Varied or project-based income tends to attract closer scrutiny of how and when that income is recognised.

None of this means you have done anything wrong. It means only that if HMRC does open an enquiry, it is likely to take time to resolve, and that time is what costs money.

What Making Tax Digital means here

From April 2026, more sole traders and landlords must keep digital records and send HMRC quarterly updates instead of a single annual return. That gives HMRC more of your data, more often, and more opportunities to query it.

Practical steps you can take

A few basic habits lower the chance of an enquiry and make any enquiry quicker and less costly to deal with if one does come.

• Keep clear, well-organised records. Evidence is your strongest position in an enquiry.

• Take care with VAT, particularly exemptions, zero-rating and borderline cases.

• Be ready to explain the reasoning behind your figures, as HMRC is asking more detailed questions than it used to.

• Come to us early if anything looks uncertain. Dealing with a query sooner usually stops it growing into something larger.

Good habits reduce the risk, and the package covers the cost if an enquiry arrives anyway.

You are in good hands

As accountants who have looked after South-West Wales businesses for over 85 years, we will deal with any enquiry either way. The Tax Investigations Package simply means we can do that without you facing a bill for it. For the cost of a small annual subscription, it removes one more thing to worry about.

Ready to protect your business?

Please contact us on 01267 237534, or email Accounts@lhp.co.uk to get covered.