The Inland Revenue has confirmed it is to increase the number of self-assessment investigations it carries out to more than 750,000 a year for the first time. During the 1998/99 tax year the Revenue estimated it had carried out 725,000 investigations, and said that figure would be increased for the 1999/2000 tax year. However, Revenue officials said the total figure was made up of two different categories, 'aspect enquiries', investigations into a single aspect of a return, and 'full enquiries' which questions the validity of the return as a whole. As a result, it said it would not be looking to recruit any new staff and denied it would be extending its budget to cope with the increased burdens. A spokesman said: 'Approximately 600,000 of the investigations will be aspect enquiries which are very quick and simple to deal with. 'They can be as easy as simply writing to people asking them to prove an issue on their return. We have no immediate plans to increase the numbers which represent under 10% of the returns we receive each year.' The Revenue also plans to increase the number of full enquiries that it carries out from 100,000 each year to 150,000. Andrew Shaw, tax partner at Kingston Smith, warned: 'The Revenue has a quota of self-assessment investigations to complete, whether they are necessary or not, with many of them undertaken on a random basis. With such an ambitious target being set we are likely to hear increasing concern voiced over the Revenue pursuing investigations just to reach their target.' TAX ENQUIRY PROTECTION SCHEME LAUNCHED A new insurance service to protect clients from the cost of a sudden blitz by the taxman has been launched by accountants Grant Thornton. It is believed to be the first service of its kind offered on a national basis. The firm says the move follows a sharp increase in the number of inspections since the launch of the government's £800m 'spend to save' initiative. Paul Falvey, Grant Thornton tax partner, said: 'Every week the Inland Revenue selects a number of personal and business taxpayers for investigation. This selection is entirely random, which means that anyone could be picked, irrespective of the size of return or whether professional advice has been sought.' Under the new scheme, which is underwritten by Lloyd's of London, clients pay a premium to cover them for the additional fees an investigation will involve. For business clients, the cover also extends to PAYE, VAT and national insurance investigations. Premiums are calculated according to the type and complexity of a client's affairs. Falvey added: 'The Revenue has said that in the next two years their investigations will exceed 200,000 businesses and 80,000 individuals. This scheme won't prevent an investigation but it will provide clients with peace of mind, knowing that they won't have to fork out for unplanned professional fees.'
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