Tax Investigation Insurance / protection

[PurpleFox]

Hi all

My accountant is offering a tax investigation fee protection service. It's an annual letter which I usually ignore but I am tempted to take it up for peace of mind. If an investigation is opened by HMRC for tax / vat or personal then their fees will be covered.

The rub is I have three quite small businesses, they want £258 per company.

I have seen it far cheaper online but wonder if it would actually pay up should I need it.......does anyone else bother or has anyone got a recommendation?

Thanks in advance.

[Simpo Two]

Logic suggests that HMRC will only start an investigation because they have grounds to do so, and those grounds would most likely be from the numbers your accountant submits... so he's selling you insurance against his own work...

[Puzzles]

What’s the provider? I think for us it’s £72+VAT per limited co and that’s with zero mark up, or kick backs etc.

Edited by Puzzles on Tuesday 6th June 10:44

[Puzzles]

Simpo Two said:

so he's selling you insurance against his own work...

That’s not totally fair, it’s up to the client. We offer it but don’t push it.

We wouldn’t actually offer it at all but a few clients insist.

[Eric Mc]

The insurance cover the additional accountancy time costs/fees that a tax investigation/enquiry would generate.

Tax investigations are far less frequent now compared to 20 plus years ago.

[PurpleFox]

Thanks for the replies. I doesn't explicitly say who the provider is, it could be Croner-i.

For them to answer any questions from HMRC I would expect a charge and for them to defend me or sit down at a face to face meeting the fees would be pretty eye watering seeing as their charges even for basic advice are hefty. Even though they compile and submit the figures, I have to sign and say they are true and accurate. If there was an issue, it would be my fault I am sure.

I would be happy to pay a few hundred for peace of mind but north of £750 is a bit much.


As it happens, just received an invoice for filing of a confirmation statement (no amendments) £79. Is that right? Think I did it once and it took less than 60 seconds.

[bigandclever]

PurpleFox said:

As it happens, just received an invoice for filing of a confirmation statement (no amendments) £79. Is that right? Think I did it once and it took less than 60 seconds.

£13 to actually file plus first hour, or part thereoef, of £66 inc VAT for someone to press the buttons for you. Bargain!

[Eric Mc]

PurpleFox said:

Thanks for the replies. I doesn't explicitly say who the provider is, it could be Croner-i.

For them to answer any questions from HMRC I would expect a charge and for them to defend me or sit down at a face to face meeting the fees would be pretty eye watering seeing as their charges even for basic advice are hefty. Even though they compile and submit the figures, I have to sign and say they are true and accurate. If there was an issue, it would be my fault I am sure.

I would be happy to pay a few hundred for peace of mind but north of £750 is a bit much.


As it happens, just received an invoice for filing of a confirmation statement (no amendments) £79. Is that right? Think I did it once and it took less than 60 seconds.

If there are no changes to be made, the process takes about 1 minute. Whoever files has to pay a £13 fee to Companies House. So they are effectively charging you £66 for one minute's work.
You decide if that is worth it.

[Simpo Two]

Puzzles said:

Simpo Two said:

so he's selling you insurance against his own work...

That’s not totally fair, it’s up to the client. We offer it but don’t push it.

We wouldn’t actually offer it at all but a few clients insist.

I agree it's optional and costs little, but in other industries wouldn't such things come out of the supplier's own PI cover or suchlike? (assuming it's the supplier's fault not the client of course).

[Eric Mc]

Simpo Two said:

I agree it's optional and costs little, but in other industries wouldn't such things come out of the supplier's own PI cover or suchlike? (assuming it's the supplier's fault not the client of course).

Absolutely.

The accountant gets paid twice - once by the client and then again when they make their own claim on their own policy. I regard it as unethical.

[MaxFromage]

Assuming it's the accountant's fault would be wide of the mark. Some investigations are still random or targeted at certain sectors. Most often clients are investigated for VAT, which may be their responsibility rather the accountant.

We offer fee protection but have never pushed it and we're always advised our client take-up is low, which I take as a compliment. Whenever the fee protection cover has been used, it's never been due to anything we've done.

don't forget, some people really like insurance for everything...

[MaxFromage]

PurpleFox said:

Thanks for the replies. I doesn't explicitly say who the provider is, it could be Croner-i.

For them to answer any questions from HMRC I would expect a charge and for them to defend me or sit down at a face to face meeting the fees would be pretty eye watering seeing as their charges even for basic advice are hefty. Even though they compile and submit the figures, I have to sign and say they are true and accurate. If there was an issue, it would be my fault I am sure.

I would be happy to pay a few hundred for peace of mind but north of £750 is a bit much.


As it happens, just received an invoice for filing of a confirmation statement (no amendments) £79. Is that right? Think I did it once and it took less than 60 seconds.

It sounds like your accountant is overcharging generally. The policies are fairly cheap and we just add a small mark-up for admin.

[wattsm666]

Eric Mc said:

If there are no changes to be made, the process takes about 1 minute. Whoever files has to pay a £13 fee to Companies House. So they are effectively charging you £66 for one minute's work.
You decide if that is worth it.

Plus the software costs of maintaining the records, chasing clients and holding all the records in a compliant form for the companies act.

[DaveA8]

It completely depends on what you want to insure for but in all likelihood anything related to non compliance is probably not covered.
My limited experience is that they sell these policies and often are sure how much useful cover is given, the policy can kick in too early and then not do anything or won’t start until well into an otherwise avoidable issue.
Looking at the cost’s being quoted and the likely enquiry costs, it’s hard to see how it could be a comprehensive policy

[TNJ]

We offer this to our clients - but it is not pushed.

To put it into context, my firm is in central London and my hourly charge out rate is £610 plus VAT. Simply replying to a basic enquiry would absorb the entire premium in less than 30 minutes.

And we are not paid twice - the insurance company pays our fee so the only cost to the client is the premium.

It is all about attitude to risk - you may not get an enquiry for several years so the premium is wasted - or you may get a full blown enquiry that takes months to resolve in which case you have benefited enormously.

Entirely up to you