In recent years, we’ve observed a marked increase in tax investigations, not only targeting businesses but also individuals. This trend is likely to continue and intensify, particularly with the Labour Government’s commitment to combatting tax evasion through an expanded workforce, technological advancements, and changes in legislation.

Chancellor Rachel Reeves has confirmed the government’s intention to recruit 5,000 additional tax officials over the next five years. This effort aims to reduce the significant £40 billion tax gap — the difference between the amount owed in taxes and what is actually collected. As part of this strategy, HMRC has already begun strengthening its staff, including appointing 200 new compliance officers focused on addressing tax compliance issues.

We’ve already seen the impact of these developments. One of our clients, a company, recently concluded a four-year-long investigation into the tax treatment of over £1 million in legal fees. The process was complex, and HMRC took an aggressive stance toward the expenses, making it a high-stakes situation. Over the course of the investigation, which spanned more than 10 rounds of correspondence, the potential tax liabilities were substantial.

However, despite the exhaustive process, we successfully managed to secure a favourable outcome. While the company did face some additional tax liabilities, our strategy significantly minimised the financial burden that was due. Professional fees incurred in excess of £15,000 were completely covered by the Tax Investigation Service that the client had opted to take on.

In another case, a private client received one of HMRC’s ‘One to Many’ letters, which suggested they had undeclared offshore income and gains. This is a common letter sent by HMRC when they have concerns about undeclared financial activity.

After a thorough review of their tax returns, we clarified to HMRC that no additional information needed to be disclosed. Thanks to the protection offered by our Tax Investigation Service, the client’s £500 in professional fees were completely covered by the service, which had only cost them £65.

These cases highlight the significant risks and costs associated with tax investigations. If your business or personal tax affairs are called into question, the process can be lengthy, stressful, and expensive. The financial and resource costs can quickly spiral, and without the right protection in place, you may find yourself facing substantial fees and uncertainty.

As the number of tax investigations continues to rise, it’s crucial to consider how you can protect yourself and your business. Our Tax Investigation Service is a proactive solution designed to safeguard you from the financial strain of these investigations. With our service, you can have peace of mind knowing that if HMRC decides to challenge your tax affairs, you’ll have professional support every step of the way — and, importantly, the cost of our services will be covered.

Taking out our Tax Investigation Service provides you with the protection and guidance you need in an increasingly challenging tax landscape. Don’t wait for a tax investigation to impact your business or personal finances — contact us to learn how you can benefit from this invaluable service and ensure that you’re fully protected.

For more information on our Tax Investigation Service click here, or get in touch with one of our specialists on advice@milstedlangdon.co.uk