Can You Buy Tax Investigation Insurance After HMRC Contacts You?

No. You cannot buy tax investigation insurance once HMRC has already contacted you about an enquiry or compliance check. This type of cover protects against a future, unknown event, so it must be in place before HMRC opens its enquiry. If you are already under enquiry, your focus should shift to appointing a qualified adviser and understanding the process. Putting cover in place now means any future HMRC enquiry could be handled without you having to face the professional fees on your own.

It is a very common question, and an understandable one. Someone receives a letter from HMRC, realises how much an accountant might charge to deal with it, and starts looking for insurance that afternoon. Unfortunately, by that point it is too late for the enquiry in question. Below we explain plainly why that is, what your options are once a check has begun, and why arranging cover in advance is worth doing before you ever need it.

Why can you not insure against something that has already started?

Insurance works by pooling risk against events that have not yet happened and might never happen. When you take out cover, neither you nor the insurer knows whether the insured event will occur. That uncertainty is the whole basis of the contract. Once HMRC has contacted you, the event you wanted to insure against has already begun. There is no longer any uncertainty to insure, so no insurer can offer cover for that enquiry. It is the same principle as trying to insure a car after a collision, or a house after a fire has started.

Tax fee protection insurance follows exactly this logic. It pays the professional fees of representing you during an HMRC enquiry or compliance check, and it only responds to enquiries that open after your policy is in force. If you want to understand the product in more detail, our guide on what tax fee protection insurance is sets out how it works.

What should you do if HMRC has already contacted you?

Being contacted by HMRC is not a reason to panic. A compliance check is simply HMRC making sure the right amount of tax has been paid, and many are routine. According to GOV.UK, HMRC can look at any of the taxes you pay, your accounts and tax calculations, your Self Assessment or Company Tax Return, and your PAYE records if you employ people. Here is a sensible order of priorities.

Appoint a qualified adviser

You do not have to deal with HMRC alone. You can authorise an accountant or tax agent to act for you, and you can have a professional present during any visit. If your representative is not already an authorised tax agent, GOV.UK explains that you write to HMRC naming the person and the tax involved. A good adviser will manage the correspondence, keep the enquiry focused, and help you avoid costly missteps.

Understand the process and your rights

Knowing what to expect removes a lot of the stress. Our explainer on what happens in an HMRC compliance check walks through the stages. In short, HMRC will ask for records and information, review them, and reach a conclusion. If you have paid too much, you may be repaid with interest. If you have underpaid, you will usually be asked to pay within 30 days, normally with interest, and a penalty may apply depending on the circumstances and how you cooperate. You also have the right to appeal a decision you disagree with.

Respond promptly and keep good records

Replying within HMRC’s deadlines and providing clear, accurate records tends to shorten an enquiry and reduce the professional time involved. It also helps demonstrate that any error was innocent, which can matter for penalties.

How long can HMRC go back, and could a future enquiry still happen?

For Self Assessment returns filed on time, HMRC generally has a window of 12 months from the date it receives the return to open an enquiry, as set out in its Self Assessment manual. Where a return is filed late, the window runs to a quarter date after the first anniversary of receipt. Separately, HMRC can also make assessments going back further where errors or deliberate behaviour are involved. The practical point is this: even after one enquiry ends, you can still be selected again in a future year. Cover you arrange today protects you against those future checks, not the one already underway.

Why put cover in place now rather than later?

Enquiries are not always the result of doing something wrong. Many are triggered by data matching, random selection, or simple anomalies in a return. Our guide to what triggers an HMRC tax investigation covers the common reasons. Because you cannot predict when HMRC will look at your affairs, the only way to be protected is to have cover in place beforehand.

Solar Protect tax investigation insurance is designed for exactly that. A policy covers up to £100,000 of your accountant’s professional fees, with no excess to pay. You can use your own accountant rather than a panel firm, and the policy pays the cost of professional representation, not the tax, interest or penalties themselves. Solar Protect and Apex Insurance Brokers are part of the same group. You can read more on our tax investigation insurance page.

If you are not yet under enquiry, now is the right time to protect yourself against the fees a future one could bring. To see what cover would cost, please get a quote, or contact us and a member of our team will be happy to talk it through.