What does an HMRC investigation cost in accountants’ fees?

Why there is no “typical bill”

Anyone quoting you a confident average cost for an HMRC investigation is guessing. The bill is a function of scope, duration and the state of your records, and each of those varies enormously from case to case. What can be described honestly is what drives the fees — and why they climb faster than most taxpayers expect.

Full enquiries versus aspect enquiries

An aspect enquiry looks at one or more specific entries in a return — a particular relief claimed, a disposal, a category of expenses. A full enquiry examines the return as a whole, and for a business that usually means the underlying books and records too. The distinction matters for cost because scope drives everything downstream: a full enquiry means more records to assemble, more questions to answer and more professional judgement calls about how to respond. Aspect enquiries can also widen. What starts as a question about one figure can become a broader review if the first answers raise new questions, and each widening restarts the clock on professional time.

The correspondence cycle

Enquiries proceed largely by letter. HMRC asks; your accountant assembles the facts, checks the technical position, drafts a response and sends it; weeks later a reply arrives with follow-up questions, and the cycle repeats. Every cycle involves chargeable work — reviewing what HMRC has asked, pulling the supporting material, considering how the answer sits with everything already said, and writing it up carefully, because imprecise answers create more questions. A seemingly modest enquiry that runs to six or eight rounds of correspondence consumes serious professional time even if each individual letter looks routine.

Information requests and records work

HMRC has formal powers under Schedule 36 Finance Act 2008 to require documents and information and to inspect business records. Responding to a formal notice is not optional, and doing it properly — working out what is validly within scope, gathering it, reviewing it before it goes out — is precisely the kind of work that mounts up quietly. Informal requests arrive too, and even those take professional time to handle well; the Solar Protect cover includes up to £250 for informal HMRC information requests alongside the main limits for formal enquiries and inspections.

Meetings, negotiations and closure

Longer enquiries often involve meetings with HMRC, and the end of an enquiry frequently involves negotiation — over technical positions, over proposed adjustments, sometimes over penalties. Your accountant’s preparation for and attendance at those stages is chargeable, and it is often the most valuable work in the whole process, because it is where the outcome is actually shaped.

The uncomfortable part: fees accrue even when you “win”

The defining unfairness of enquiry costs is that they are largely independent of the outcome. An enquiry that closes with no additional tax payable still consumed every hour of the professional time it took to get there — and none of that is recoverable from HMRC in the ordinary course. A compliant taxpayer with good records pays to demonstrate compliance. That is the exposure fee protection is built for.

How fee protection responds

Tax fee protection insurance meets the accountancy fees of handling the enquiry as they arise, so decisions about how thoroughly to defend your position are not distorted by what each letter costs to answer. The cover available through Solar Protect provides up to £100,000 of accountants’ fees, no excess, using your own accountant — the adviser who already knows your affairs, which itself keeps fees down. What it never does is pay tax that is due, and no policy covers deliberate fraud. For what the cover includes in full, see our tax fee protection hub page; for the fee-heavy specialist categories, see IR35 enquiries and VAT compliance checks.

Frequently asked questions

Can you give a ballpark figure for what an enquiry costs?

No honest one exists. Cost depends on the enquiry's scope (aspect versus full), how many correspondence cycles it runs, the state of your records, and whether meetings and negotiation are needed. The same opening letter can lead to very different bills.

If HMRC finds nothing, do they pay my accountant's fees?

In the ordinary course, no. Professional fees are generally not recoverable from HMRC even when an enquiry closes with no adjustment, which is exactly why the fee exposure is worth insuring.

Does fee protection cover formal HMRC information notices?

The Solar Protect cover includes Schedule 36 Finance Act 2008 record checks and inspections, and up to £250 towards informal HMRC information requests.

Will the insurer make me use their own accountant?

Not under this cover — you use your own accountant throughout, which usually keeps the work faster and cheaper because they already know your affairs.

Does the policy pay any tax or penalties HMRC charges?

No. It pays professional fees only. Tax lawfully due, and penalties, are never insurable — talk to your accountant about the tax position itself.

Solar Protect is a trading style of Solar Insurance Services (Medway) Limited, authorised and regulated by the Financial Conduct Authority (FRN 459582), and is part of the same group as Apex Insurance Brokers.

Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority (FRN 724952). This page is general information, not advice on a specific policy.