Tax Investigation Insurance

babyblue2

We are a firm of Chartered Surveyors who pretty much do things by the book. Our accountants have asked us if we want to join their Tax Investigation Insurance Scheme for £113.00 per year. Does anyone know whether it is worth it to take out this policy?

lisyloo

How busy is your firm?
Do you have people spare at the moment, who could spend many hours if you were unlucky enough to be called for a random inspection.

Depends on how much income you would lose if this happened.

If you are a really busy firm and you can afford it then I would think it might be worth having.
If you have spare time on your hands and could give the hours for free in the event, then it isn't worth taking.

babyblue2

lisyloo wrote: »

How busy is your firm?
Do you have people spare at the moment, who could spend many hours if you were unlucky enough to be called for a random inspection.

Depends on how much income you would lose if this happened.

If you are a really busy firm and you can afford it then I would think it might be worth having.
If you have spare time on your hands and could give the hours for free in the event, then it isn't worth taking.

Hi, Its a busy firm but my husband is the busy one. I keep the books up to date but thats about it. I don't really know what they could look to inspect. We don't accept cash jobs, we perhaps travel slightly more miles each month than actual but it can be justified. Gross turnover around £90k, profit more like £25k-£30k

lisyloo

I don't really know what they could look to inspect.

Well I've no experience of this but I know from my own income tax affairs that the inland revenue do not check my pension statements/charity receipts etc., they just take my word for the amounts (well my declararion).
I would guess it's the same in business, that they accept declarations/amounts without checking full proof for everything.

So I would guess that if you got randomly selected then they could check for proof (receipts) for every single claimable item. This may involve you in finding/justifying particular items. For example I currently provide a figure for my pension contributions. If I had to actually prove them then I'd have to find payslips or statements showing the deducations or payments.

If there would be little impact on your business i.e. you would simply spend the time yourself and it would not affect your husband and therefore would not affect the business income then personally I don't think I would bother.

I'm sure you do anyway, but just make sure all your records are orderly and then it should be very easy to justify/prove everything, if you were ever randomly selected.

cogito

It's probably cheaper to buy a Legal Expenses policy which will cover more than just tax and VAT investigations. Bear in mind that any such investigation would result in you spending many hours assisting the investigation regardless of any insurance cover you may have.

dacouch

There is a good chance that your existing business insurance (Either for your property eg office contents / liability or your professional indemnity) already includes cover for tax investigations free of charge. Give your brokers a ring and ask them

martinrothwell

If you dont already have the cover from another source (for example membership of the FSB) then it is well worth it. We had a random investigation about 5 years ago and our final accountants bill to deal with the matter was over £5,000 - all covered by the insurance. Depends on the size of your business and complexity, but it is a small price to pay for the peace of mind it offers.