Tax investigation insurance, worth it?

Monty_Carlo_2

Indeed. An Aspect Enquiry into, say, your payroll can easily turn into a full- blown investigation of all your affairs, and the IR are known to use this power to intimidate. They know that their time is free but yours, in professional fees and opportunity costs from being tied up with them, is very expensive.

I bought my insurance through my accountant, who had block-bought 150 policies to resell to clients, and it was only after me pressing him that he told me this vital detail. The trigger for the insurance cover to kick in is the issue of a specific letter that HMRC send you (I forget the code, but IRxx) giving notice that they are starting a full enquiry.

I got jittery after going ten years S/E with no HMRC contact, so took a policy, but as I have very complicated affairs I consider it worth the money. With a 'simple' in/out retail business I wouldn't be so worried about having it.

Pennywise

Most tax investigation insurance won't cover an "aspect enquiry" but these are usually quick and simple to deal with. Such an enquiry is usually only about a single aspect of a tax return. If an aspect enquiry turns into a full enquiry, then the insurance kicks in.

I can't speak for the others, but our policy does include VAT, PAYE and NIC disputes in addition to full enquiries, so anything contentious arising from a routine visit of an inspector to look into these areas will be covered.

It is also worthy of note that the insurance won't cover you if you havn't kept basic accounting records, if you didn't submit your tax return on time, or where you are deliberately evading taxes (i.e. putting money in your back pocket).

cartimandua51

Monty_Carlo wrote: »

Indeed. An Aspect Enquiry into, say, your payroll can easily turn into a full- blown investigation of all your affairs, and the IR are known to use this power to intimidate. They know that their time is free but yours, in professional fees and opportunity costs from being tied up with them, is very expensive.

And the mere fact that you can turn round and say "I'll have to get back to you in a couple of days as I need to get my insurance going on this" means that they know they WILL have a fight on their hands and it's NOT going to cost you a shedload of money; therefore they may move off to pick on a weaker target.