HMRC can select any taxpayer at random and the risk of being selected will depend upon your individual circumstances. These investigations will range from a simple request for information right through to an investigation into all your business and personal finances.

HMRC can impose penalties for inaccuracies where additional tax is due. The severity of any penalty depends on whether the discrepancy was deemed careless or deliberate.

Investigations are, by their nature, intrusive, expensive and can last months - or even for many years.

Yes, anyone who is required to fill in a self-assessment tax return can purchase Tax Defence.

HMRC takes a risk-based approach, using data and analytics to identify discrepancies. Random checks can also occur, making it crucial for taxpayers to maintain accurate records. Discrepancies in tax returns, large fluctuations in income, and information received from third parties, such as online platforms and payment processors, can trigger an investigation.

HMRC may request a wide range of documents, including bank statements, invoices, receipts, and expense records. Having comprehensive and organised records helps you to protect yourself in case of an investigation.

For more details, refer to Gov.uk.

Unfortunately not. HMRC also gathers data from banks and payment processors (by credit/debit card). So, whether you have a part-time business, childmind or even run a stall at the local farmers’ market, any transactions can be investigated

This kind of situation can be tricky to navigate. If you are just selling some unwanted items that have been lying around your home - such as the contents of a loft or garage - it is unlikely that you will have to pay tax.

If you buy goods for resale or make goods with the intention of selling them for a profit, then you are more likely to be trading and may have to pay tax on your profits.

However, if your total income from trading or providing services online was less than £1,000 (before deducting expenses) in any tax year, you would not be required to inform HMRC nor pay any tax on the profits (this is due to the Trading and Miscellaneous Income Allowance).

Source: Selling online and paying taxes - information sheet - GOV.UK (www.gov.uk)

HMRC may target holiday rental owners if there are discrepancies in declared income, especially if rental income is not reported accurately. This includes income from platforms like Airbnb. Regular audits and cross-referencing with third-party data can flag inconsistencies.

This means that if you are investigated you could be subject to additional liability and penalties for a number of years.

Having tax investigation insurance with Markel Tax will cover the costs of professional fees during an investigation, providing peace of mind and financial protection*.

*Please refer to IPID for full information

Any trade or profession can benefit from Tax Defence. Whether you are in business or are an individual - so long as you file a tax return, you are at risk. Typical businesses and kinds of people that benefit from Tax Defence include:

• Manufacturers
• Retail businesses
• On-line sellers
• Restaurant/takeaways
• Taxi drivers
• Healthcare providers
• Publicans
• Construction businesses
• Farming businesses
• Arts/entertainment providers
• Professionals
• High-net-worth individuals

We’ll guide you through the quote process. Here are some of the key details about your activities and income that we’ll need to know:

• What type of business you are (Company, Partnership or Sole Trader)
• Your last declared business turnover
• What personal income you declared on your last Tax Return
• What profession or trade are you in

Your turnover will affect the risk profile and possible complexity of an HMRC enquiry. If you have not previously submitted a tax return, you should use your projected turnover for the coming 12-month period. You should include income from all sources, including rental income, proceeds of any capital gains, any overseas income and other investment income.

Although overseas income is used to determine your turnover band, please note that the Policy will not provide cover for any tax enquiry conducted outside of the UK by an overseas tax authority into the overseas income.

Making a claim is simple - our dedicated claims team are on hand to guide you through every step of the process.

If you receive an enquiry notice from HMRC, contact us as soon as possible. This will ensure we can open your claims and make sure our experts can be on your side and supporting you from day one.

You can call our dedicated claims team 9:00 to 5:00pm, Monday to Friday on 0370 166 6271 or email us at taxclaimsuk@markel.com.