Across our public sector client base, HMRC enquiries are landing more often. We are seeing checks arise across VAT, employment taxes and wider compliance areas, often without any obvious pattern, and with requests for detailed information that can place immediate pressure on internal finance teams.

Importantly, being selected for enquiry does not mean anything is wrong.

Indeed, we are seeing a significant increase in HMRC fishing expeditions and reliance on incorrect knowledge and assumptions about public bodies and public sector employment tax and VAT legislation.

In the last few months we have seen an increase in HMRC officers are making fundamental mistakes, requiring public bodies to carry out unnecessary work and waste valuable time to resolve.

Many checks arise through routine risk profiling, targeted activity or sector campaigns. Even so, responding well still takes time, technical judgement and careful handling from the outset.

For 2026/27, PSTAX has introduced PSTAX Club Protect, a new optional addition to the PSTAX Club that gives local authorities added reassurance and budget certainty if HMRC opens an enquiry.

What PSTAX Club Protect does

PSTAX Club Protect provides expert representation and protection against eligible professional fees if HMRC opens an enquiry into your organisation’s tax affairs.

Where an enquiry arises, PSTAX will:

• Act as your main point of contact with HMRC
• Manage correspondence, meetings and information requests
• Help keep enquiries proportionate and properly directed
• Reclaim eligible professional costs directly from the insurer

This helps finance teams manage the process with greater confidence, knowing the enquiry is being dealt with by advisers who already understand their organisation and the public sector context.

What is covered?

Fee protection of up to £125,000 is available for a wide range of HMRC enquiries, including:

• VAT reviews and inspections
• Employer compliance checks
• PAYE, NIC and P11D enquiries
• IR35 and off-payroll working disputes
• National Minimum Wage reviews
• Corporation Tax enquiries

Lower limits apply in certain specialist areas, including Code of Practice 8, Inheritance Tax and land transaction taxes.

Managing HMRC enquiries in local authorities and other public bodies

HMRC enquiries often arrive at difficult points in the financial year and can lead to significant unplanned advisory costs. They can also demand a level of detail that is difficult to pull together quickly without putting pressure on day-to-day work.

PSTAX Club Protect offers a low, fixed annual cost to help protect against potentially significant professional fees, while allowing early and informed engagement with HMRC.

For Section 151 Officers and audit committees, it also provides added reassurance that enquiries are being handled consistently, proportionately and with appropriate governance oversight.

Cost and availability

PSTAX Club Protect is available to PSTAX Club subscribers only and is offered at cost for 2026/27.

The additional annual cost is £450, exclusive of VAT.

Find out more

If you would like to discuss whether this cover is right for your organisation, please speak to your usual PSTAX contact or message the team.

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