Tax investigation insurance, worth it?

scooby32

It ay be cheaper because it is for a sole trader (through accountant). I did notice the federation of small business offered this as part of its membership, might be worth a look it was about the same price for membership.

Colin2511

I would also second the FSB - there are 2 of us in our company and it costs £150 per year (100 + 50), each year I chuff and wonder why I pay this, and each year the fees are recouped easily

yr 1 - setting up streamline and discount
yr 2 - legal advice when getting hassle from a customer
yr 3 ......nothing yet

they did say, if / when we get a tax or vat audit just to call them, and this was one of his sales pitches at the time that they are here to help on that.

We also like to think we run a tight ship, but you never know, and I would like someone there if any mistakes are found

Murphy_The_Cat

Colin2511 wrote: »

We also like to think we run a tight ship, but you never know, and I would like someone there if any mistakes are found

Also, a lot of what HMRC does is down to interpretation of the regs. Your accountant says that doing X is OK, the Inspector says that doing X was not OK and a tax/NI charge is now due --- and that is where a lot of the hassle & cost comes in as people aregue the toss backwards and forwards, over what may be a fairly small amount (but not so small if they go back 6 years and then charge you interest & penalties :eek:)

robert_harper_2000

so innocent mistakes can be charged with penalties and interest? So when they take six months to reply to a letter and constantly make mistakes why can't we charge them\!

Murphy_The_Cat

robert_harper_2000 wrote: »

so innocent mistakes can be charged with penalties and interest? So when they take six months to reply to a letter and constantly make mistakes why can't we charge them\!

In fairness to HMRC, if they owe YOU money, you do get the interest.

But yes, if you enter something (on HMRC advice) that is later judged to be incoreect, you can will be charged penalties & interest.

stphnstevey

Hmm, got me thinking do I need this...

Murphy_The_Cat

stphnstevey wrote: »

Hmm, got me thinking do I need this...

If you have it and never get an investigation, you will wonder if it was money well spent.. If you have it and you do get an investigation, you'll be very grateful that you have it.
If you decide to look into it further, check with the service provider as to how hard, how aggressive, how long and how much money they will put to your case if/when HMRC find something that they want to charge you for. Also, if any excess charge applies to the policy.

good luck

Monty_Carlo_2

Can I add a note of caution?

I have insurance for this at around £120pa and was told it has to be a FULL HMRC Enquiry for a claim to be valid. An Aspect Enquiry is NOT covered even though this could still cost a lot of money to "defend".

Just something to consider.

Pennywise

robert_harper_2000 wrote: »

wow I cancelled mine cause it was more like £300... can you say whose offering it for £120

Our firm charges £78.75 per year, but our service is only for our clients. Apparently the underwriting costs vary on the average type of client in the accountancy practice, and the number (and cost) of investigations in the past. We are so cheap because we're a very small practice, have very "simple" clients and have a very good history of few investigations which are quickly resolved.

You can get similar cover by joining Fed of Small Businesses or your local chamber of commerce for say £100 p.a. or as an add on to your business combined insurance for a similar amount.

Murphy_The_Cat

Monty_Carlo wrote: »

Can I add a note of caution?

I have insurance for this at around £120pa and was told it has to be a FULL HMRC Enquiry for a claim to be valid. An Aspect Enquiry is NOT covered even though this could still cost a lot of money to "defend".

Just something to consider.

Thats really interesting, as its the Full HMRC Enquiry that you are threatened with if you don't immediately accept the HMRC Compliance Inspectors figures (some less charitable people would call in blackmail by HMRC) -- so, as usual, the Devil is in the details & the insurance taht you take out many not be what you expect it to be at the time.