Tax Investigation Insurance for Employers

Any business that runs a payroll can face an HMRC employer compliance check into PAYE, National Insurance, expenses, benefits and the status of the people it pays. These checks can look back over several years and involve a lot of records. Tax investigation insurance pays your accountant’s fees for dealing with them. Solar Protect cover includes PAYE and National Insurance compliance checks and pays up to £100,000 with no excess.

What does an employer compliance check cover?

HMRC checks whether an employer has operated PAYE and National Insurance correctly. Our guide to the HMRC employer compliance check explains the process in detail. The areas HMRC commonly looks at include:

whether everyone paid through payroll was paid correctly, and whether anyone paid outside payroll should have been on it;
expenses paid to staff and whether they were taxable;
benefits in kind, P11D forms and Class 1A National Insurance;
the employment status of contractors and freelancers, including off payroll working rules for medium and large clients;
claims for the Employment Allowance.

Can HMRC visit the business?

Yes. HMRC can inspect business premises and records under Schedule 36 to the Finance Act 2008. Its factsheet CC/FS3 says that for visits by agreement or advance notice it will usually give at least 7 days’ notice. Unannounced inspections are possible in some circumstances. See our guide to Schedule 36 information notices.

What does it cost if HMRC finds a problem?

The business has to pay any PAYE and National Insurance that should have been deducted, with interest, and penalties can apply. Because employment taxes cover every worker, a small error repeated over several years can add up. Status disputes are particularly expensive, because if HMRC decides a contractor was really an employee, it can seek the tax and National Insurance that should have been operated.

How long do these checks take?

There is no fixed timetable. Checks run until HMRC is satisfied, and the employer has to answer information requests within the time HMRC sets. A properly prepared response from an accountant can keep a check narrow and stop it widening into other years.

What does tax investigation insurance pay for?

It pays the professional fees of dealing with HMRC, from the first letter to the outcome, up to the policy limit. Solar Protect cover responds to PAYE and National Insurance compliance checks, IR35 and employment status disputes, and full and aspect enquiries into the business’s Corporation Tax or Income Tax return. It does not pay any tax, National Insurance, interest or penalties, and it will not cover a check that began before the policy.

Read how our cover works or get a quote today. Limited companies can also read tax investigation insurance for limited companies.

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 7 October 2026. This guide is general information, not personalised tax advice. Cover is subject to the policy terms, conditions and exclusions.