Most subcontractors worry about HMRC finding something wrong. The more unsettling truth is that an enquiry can be expensive even when they find nothing at all. The cost of proving your innocence — accountant time, correspondence, document gathering, meetings — lands on you regardless of the outcome.

The Misconception That Costs Subcontractors Thousands

Ask most tradespeople what happens if HMRC investigates them, and they will say something like: "My accountant handles it." This is one of the most expensive assumptions in self-employment.

Standard annual accounting packages — even good ones — almost never include full enquiry support. They cover the preparation and filing of your return. The moment HMRC opens a compliance check or full investigation, the work involved escalates dramatically: letters, records requests, correspondence, meetings, negotiations. That is not filing work. It is defence work — and it is billed separately, by the hour.

What Tax Fee Protection Insurance Actually Does

Tax Fee Protection Insurance — also called HMRC Enquiry Insurance or Fee Protection Cover — pays your accountant's professional fees when HMRC opens a check or investigation into your tax affairs. It is not insurance against owing tax. It does not pay penalties or interest. It pays the cost of the professional time spent defending your position.

The Real Numbers: A Routine Enquiry

This is not a worst-case scenario. This is a routine compliance check — the type HMRC runs thousands of every year on CIS subcontractors with above-average expense claims.

What Actually Triggers an HMRC Enquiry for CIS Workers

HMRC does not open enquiries at random. Certain patterns in a Self Assessment return draw automated flags — and CIS subcontractors are disproportionately represented in several of them.

What to Look for When Choosing a Policy

Not all Tax Fee Protection policies are equal. These are the questions to ask before you sign up — and the answers that separate a useful policy from a box-ticking exercise.

• 01
  Does It Cover CIS Status Disputes and IR35 Reviews? Status enquiries — where HMRC challenges whether you are genuinely self-employed — are among the most complex and expensive to defend. Some policies exclude them or treat them as a separate add-on. Confirm coverage explicitly before purchasing.
• 02
  What Is the Maximum Cover Per Claim? £50,000–£100,000 is usually sufficient for a sole trader CIS subcontractor. A full investigation involving multiple years and complex issues can generate significant professional fees, so higher limits are worth paying for. Avoid policies capped at £10,000–£20,000 — they may not cover a protracted enquiry.
• 03
  Is a Year-Round Tax Helpline Included? The best policies include access to a qualified tax adviser by phone throughout the year — not just when an enquiry opens. This is often the most practical day-to-day benefit: a quick call to check whether a particular claim is defensible before you make it, rather than after HMRC queries it.
• 04
  Are VAT Enquiries and PAYE Reviews Covered? If you are VAT-registered or you employ workers, make sure the policy covers VAT compliance visits and PAYE reviews as well as Self Assessment enquiries. Policies that only cover income tax are narrower than they appear.
• 05
  What Are the Key Exclusions? Read the exclusions carefully. Most policies will not cover enquiries triggered by late or missing tax returns, deliberate tax evasion, or claims HMRC deems negligently prepared. This is the strongest argument for clean, on-time bookkeeping — not just for HMRC compliance, but because it determines whether your insurance policy will pay out when you need it.

Is It Worth It? The Honest Decision Framework

The Question to Ask Your Accountant This Week

Before you decide either way, ask your accountant one direct question: "If HMRC opens an enquiry into my return tomorrow, does your current fee cover the full cost of defending it — or is that billed separately?"

Most will say separately. The honest ones will say always separately. Once you have that answer, the decision on whether £250 a year is worth it becomes considerably easier to make.

An HMRC enquiry is stressful enough when everything is in order. Walking into one without professional cover — and without the cash to pay for it — turns a manageable situation into a financial crisis. For most CIS subcontractors, spending the cost of a decent pair of work boots once a year to prevent that scenario is not a difficult calculation.