Tax investigation insurance

[AndreasC]

This is for accountants out there.

I'm registered with ACCA and have been approached by Croner-i to take out a whole firm practice Tax investigation insurance policy that would cover the cost of my fees to clients relating to HMRC enquiries. They have said that I could then sell it to my clients individually as a service rather than an insurance policy and charge an annual fee e.g. £100 to offset the cost.

Do you know what the regulatory requirements are on doing this as it seems it is Insurance Distribution Activities so is FCA regulated and the PII cover required is £1.5m!

Is this something I need to register with FCA for, directly or indirectly through the DPM regime for exempt regulated activities?

Any help appreciated

 

[Ozzy]

I know you have asked for comments from other accountants, so disregard this reply if it really isn't relevant but here goes...
Speaking as a client perspective, I don't trust these insurance policies and frown when I get a letter from my accountant trying to upsell it or if they try it on when we meet. It gives me the same vibe as the car dealership trying to upsell me this fancy leather polish and gleam tat all dealerships try and flog you.

As a business owner (client) my opinion of my accountant drops a bit as soon as they try and upsell me it.

I accept I may be wrong and the insurance may actually be worth something, but my opinion is mine as it is.

 

[AndreasC]

I know you have asked for comments from other accountants, so disregard this reply if it really isn't relevant but here goes...
Speaking as a client perspective, I don't trust these insurance policies and frown when I get a letter from my accountant trying to upsell it or if they try it on when we meet. It gives me the same vibe as the car dealership trying to upsell me this fancy leather polish and gleam tat all dealerships try and flog you.

As a business owner (client) my opinion of my accountant drops a bit as soon as they try and upsell me it.

I accept I may be wrong and the insurance may actually be worth something, but my opinion is mine as it is.

Appreciate your feedback Ozzy but I am only looking at this because one of my clients specifically wants it. It gives them peace of mind I suppose.

It won't be for most clients (the uptake it generally low) but HMRC enquiries into R&D claims have shot up so for start ups it will likely be a cheap alternative to our fees. Having said that if all my clients claim then my premiums the next year will probably make it not worthwhile but with business you have to listen to your clients, others who have done it and see what works.

 

[UK Contractor Accountant]

I looked into this a few years back for my Practice and came to the same conclusion as Ozzy mentioned above.

Now I just recommend they take FSB membership if they ask about tax protection Insurance as comes part of the benefits of membership.

 

[UK Contractor Accountant]

Exempt regulated activities (UK)

We’re a Designated Professional Body (DPB) under the Financial Services and Markets Act 2000, which means that member firms can carry out a limited range of regulated activities.

www.accaglobal.com

 

[AndreasC]

I looked into this a few years back for my Practice and came to the same conclusion as Ozzy mentioned above.

Now I just recommend they take FSB membership if they ask about tax protection Insurance as comes part of the benefits of membership.

Cheers. Most personal tax is covered under home insurance policies anyway.

My gut feeling is it's not worthwhile. It seems more hassle for little benefit

 

[UK Contractor Accountant]

We have only had Aspect enquiries which have been dealt with really quickly so couldn't really justify trying to flog a full insurance policy.

 

[MyAccountantOnline]

This is for accountants out there.

I'm registered with ACCA and have been approached by Croner-i to take out a whole firm practice Tax investigation insurance policy that would cover the cost of my fees to clients relating to HMRC enquiries. They have said that I could then sell it to my clients individually as a service rather than an insurance policy and charge an annual fee e.g. £100 to offset the cost.

Do you know what the regulatory requirements are on doing this as it seems it is Insurance Distribution Activities so is FCA regulated and the PII cover required is £1.5m!

Is this something I need to register with FCA for, directly or indirectly through the DPM regime for exempt regulated activities?

Any help appreciated

If it's something you really want to do I'd speak with the ACCA I generally find them very helpful.

I personally have no desire to sell insurance to clients and wouldn't do it.

You may find it's a costly exercise for you when you try to resell it.

 

[DEBS Ltd]

Cheers. Most personal tax is covered under home insurance policies anyway.

My gut feeling is it's not worthwhile. It seems more hassle for little benefit

Just to be clear, it's not covered under the home insurance.

There MAY be a legal expenses section attached to it which covers this.

Alternatively they can buy legal expenses cover which isn't expensive.

 

[lesvatadvice]

As an adviser, whose work has been sometimes funded by such policies; read the exclusions carefully.
For example, on one occasion the policy would not pay out where the client unilaterally advised an error to HMRC. Had he waited for HMRC to 'find' it, it would have paid out!