Tax Investigation Insurance

voyagerbear

I am a UK expat with a house in UK that I let. No other UK income.

My accountant of twenty years recently retired and new accountant asked if I want Tax Investigation Insurance. I've never been offered it before.

What are people's opinions on this please?

agrinnall

Are you confident that you are paying all of the tax that you should be? If so then there's probably no great reason to get investigation insurance. It's really of more potential benefit when people have more complicated affairs and they may be unsure of how much tax they should be paying.

Pennywise

Having known several people, over the last 20-30 years, who've been subject of an enquiry, I'd say they were very grateful that they avoided the hefty fees of defending themselves against completely spurious claims by HMRC. Even people with simple affairs can get caught up with over-zealous HMRC inspectors who believe they have some "intelligence" from other sources and make your life an absolute misery. Tax enquiry insurance is usually under £100 - some household insurers cover it via their personal legal protection add-on for buttons, some professional organisations offer it as a benefit of membership. Unless someone is trying to rip you off by charging hundreds of pounds for it, it's very cheap peace of mind.

keaton

Pennywise wrote: »

Having known several people, over the last 20-30 years, who've been subject of an enquiry, I'd say they were very grateful that they avoided the hefty fees of defending themselves against completely spurious claims by HMRC. Even people with simple affairs can get caught up with over-zealous HMRC inspectors who believe they have some "intelligence" from other sources and make your life an absolute misery. Tax enquiry insurance is usually under £100 - some household insurers cover it via their personal legal protection add-on for buttons, some professional organisations offer it as a benefit of membership. Unless someone is trying to rip you off by charging hundreds of pounds for it, it's very cheap peace of mind.

Realistically what are the chances of a investigation/enquiry?

chrismac1

The UK average is reckoned to be 3% per year. My own average - 140 clients - is 1%. But of £250,000 or more sought by HMRC they have achieved £67 in their enquiries with me, so that is perhaps why I don't get many.

By comparison, a local accountant who ended up being struck off was snowed under with HMRC enquiries.

A standard buy to let with no massive expenditure on capital items, or funny stuff like big travel costs, is less likely to be selected.

Set against that, I have to say HMRC are a pretty incompetent bunch these days. Most of the tax enquiries they launched on my client base had no realistic hope of victory, and anyone familiar with the UK tax laws should have known this.

Conversely, ALL - repeat ALL - the tax returns with what I call " material grey area" items in them i.e. big ticket items where it is a matter of opinion not fact whether they are capital or revenue, for example - have seen ZERO enquiries.

I am 95% confident that back in the 1990s when I started out such tax returns would have seen a few enquiries AND we'd probably have cut a deal to pay a bit of extra tax - not as much as the inspector was after, but not zero either.

So because of HMRC's general incompetence - which can never be underestimated - even a "safe as houses, everything by the book, no grey area items" - taxpayer cannot be totally confident.

In general for £80 plus VAT per year it is not that bad value compared to a lot of insurance items.

Lea74

Just wanted to jump on this thread as am hoping to get some suggestions of providers of investigation insurance.

Any suggestions appreciated? Many thanks.

firefox1956

As in post 3...........
If you have Legal Expenses Cover on your home or business insurance read the small print & you may find you are already covered.
HTH

voyagerbear

It's £115 inclusive of IPT.......whatever that is.......???

antrobus

voyagerbear wrote: »

It's £115 inclusive of IPT.......whatever that is.......???

IPT = Insurance Premium Tax

voyagerbear

Still not done it and time running out as the accountant will submit on 12th December. I cannot get any policy info. Nothing for individuals on their website as it's sent out to accountants for their clients. Everything I read implies its for people with businesses not people that rent out one house. Hadn't even heard of it before.

3card

voyagerbear wrote: »

Still not done it and time running out as the accountant will submit on 12th December. I cannot get any policy info. Nothing for individuals on their website as it's sent out to accountants for their clients. Everything I read implies its for people with businesses not people that rent out one house. Hadn't even heard of it before.

I recently joined the National Landlord Association which offers this cover as part of their membership scheme

May be worth looking at that?

3card