Invoice from accountant for insurance
Discussion
Hi all,
I can't remember if I asked this last year or not (grey cells rapidly reducing in number as grey hair rapidly increases). Anyway I got home today to find a second invoice (for this year) wanting me to cough up £47 for insurance to cover professional costs in case the IR decided to audit my accounts. Is this common now? I've been with this firm of accountants for 3 years, didn't have this insurance in the first year. The guy I used before them didn't ever request this extra cover.
Alternatively, anyone got any recommendations for accountants around the Huntingdon/Peterborough area who charge less than £500 to sort out and submit an incredibly simple set of accounts?
Cheers,
Rob
I can't remember if I asked this last year or not (grey cells rapidly reducing in number as grey hair rapidly increases). Anyway I got home today to find a second invoice (for this year) wanting me to cough up £47 for insurance to cover professional costs in case the IR decided to audit my accounts. Is this common now? I've been with this firm of accountants for 3 years, didn't have this insurance in the first year. The guy I used before them didn't ever request this extra cover.
Alternatively, anyone got any recommendations for accountants around the Huntingdon/Peterborough area who charge less than £500 to sort out and submit an incredibly simple set of accounts?
Cheers,
Rob
It's called Professional Fee Protection and has been around for yonks (I worked for a firm who had it in place in 1990).
This is how it works. The firm of accountants charges you a normal fee for doing your annual accounts and tax return and for general business/accounting tax advice. However, if your tax affairs were selected for investigation by HMRC, your accountants would incur extra time charges and other costs in dealing with the investigation. They would normally have to recover these time costs by billing the relevant client.
If they have one of these fee protection policies in place and they have a client who is being investigated, the firm notifies the insurance company that this is happening. If the case is approved by the insurers, they recover the time costs directly from the insurer (not you). So, they won't charge you directly for doing the investigation work.
However, the annual premium is quite high and they often recover the premium costs (usually with a bit of a profit margin for themselves) by billing their clients for this extra "service".
The catch for the client is that it is not the client who is covered by the policy, but the accountants themselves. Therefore, whether you agree to pay the accountants the fee they are charging for the insurance, THEY ARE STILL COVERED ANYWAY FOR DEALING WITH YOUR INVESTIGATION and will still be able to recover their time costs from the insurers.
This is how it works. The firm of accountants charges you a normal fee for doing your annual accounts and tax return and for general business/accounting tax advice. However, if your tax affairs were selected for investigation by HMRC, your accountants would incur extra time charges and other costs in dealing with the investigation. They would normally have to recover these time costs by billing the relevant client.
If they have one of these fee protection policies in place and they have a client who is being investigated, the firm notifies the insurance company that this is happening. If the case is approved by the insurers, they recover the time costs directly from the insurer (not you). So, they won't charge you directly for doing the investigation work.
However, the annual premium is quite high and they often recover the premium costs (usually with a bit of a profit margin for themselves) by billing their clients for this extra "service".
The catch for the client is that it is not the client who is covered by the policy, but the accountants themselves. Therefore, whether you agree to pay the accountants the fee they are charging for the insurance, THEY ARE STILL COVERED ANYWAY FOR DEALING WITH YOUR INVESTIGATION and will still be able to recover their time costs from the insurers.
Dave_ST220 said:
Join the FSB, you'll get the same cover & extra benefits 
What, that the FSB Insurance will cover your accounting fees?In my experience, the insurance company became very choosy about which cases they were willing to take on. They began to reject cases where there was even the slightest hint that the accountants might have exposed the client to an investigation (e.g. through poor explanation of a odd figure in the accounts or a mistake on the tax return)or that the client might have been less than honest about his financial affairs.
I know this may vary depending on the insurance company being used.
Eric Mc said:
Dave_ST220 said:
Join the FSB, you'll get the same cover & extra benefits
What, that the FSB Insurance will cover your accounting fees?In my experience, the insurance company became very choosy about which cases they were willing to take on. They began to reject cases where there was even the slightest hint that the accountants might have exposed the client to an investigation (e.g. through poor explanation of a odd figure in the accounts or a mistake on the tax return)or that the client might have been less than honest about his financial affairs.
I know this may vary depending on the insurance company being used.
I use to take this from my accountant but for the last couple of years I've been using a Company called Icon Insurance for all my insurance needs - you'll find them on the Web. What I like about their Tax investigation insurance is that you can get Jury Service cover included which is very useful for a one man band Consultancy Company.
You just need to be sure that accounting and tax advice fees are covered by the policy. You are not obliged to accept the accounting firm's scheme - and there is the possibility that you may be covered by the firm's scheme whether you pay the accounting firm's "insurance" invoice or not.
thegreengoblet said:
I use to take this from my accountant but for the last couple of years I've been using a Company called Icon Insurance for all my insurance needs - you'll find them on the Web. What I like about their Tax investigation insurance is that you can get Jury Service cover included which is very useful for a one man band Consultancy Company.
The post made me check mine, I use Abbey tax and just had their renewal in at £278.00 for the year, seems it has slowly gone up over the years. However, a very worthwhile cost as I was investigated for the 1999/2000 tax year. You are not obligated to meet inspector, accountants are not allowed to even mention that investigation is insured and does save several thousands of squids. After 8 months of investigation I had to pay £580.00 for an item that should have been written down over 3 years instead of 1 year and a few squids interest. Does this premium seem a lot though??Dave_ST220 said:
Join the FSB, you'll get the same cover & extra benefits
I joined the FSB yesterday, and, as you say, it was a big selling point. The rep said that of the 200,000+ members, only around 140 per year are investigated, as their client representatives are generally themselves ex-IR, and refuse to be intimidated.Total cost of membership was around the same as I pay for my accountancy insurance.
Having been on the end of a (routine) VAT inspection, anything that means I haven't got to deal with C&E or IR is alright by me.
Eric Mc said:
What was covered by the policy?
to quote"All costs of proffesional expenses that are incurred whilst dealing with revenue authority disputes and investigations" It is triggered by their (HM Gov) letter stating an investigation under certain named authority "Under section something or other" Their renewal letter states that there has been an increase in premium because there has been an increase in enquiry costs due to the HMRC insistance on keeping enquiries open to collect the last penny possible! My accountant said that the tax inspector who did mine would have got a black mark for so little return given period of investigation but not sure what to believe, if they get a commision then it was not much!
AdeTuono said:
Dave_ST220 said:
Join the FSB, you'll get the same cover & extra benefits
I joined the FSB yesterday, and, as you say, it was a big selling point. The rep said that of the 200,000+ members, only around 140 per year are investigated, as their client representatives are generally themselves ex-IR, and refuse to be intimidated.Total cost of membership was around the same as I pay for my accountancy insurance.
Having been on the end of a (routine) VAT inspection, anything that means I haven't got to deal with C&E or IR is alright by me.
henna777 said:
Eric Mc said:
What was covered by the policy?
to quote"All costs of proffesional expenses that are incurred whilst dealing with revenue authority disputes and investigations" It is triggered by their (HM Gov) letter stating an investigation under certain named authority "Under section something or other" Their renewal letter states that there has been an increase in premium because there has been an increase in enquiry costs due to the HMRC insistance on keeping enquiries open to collect the last penny possible! My accountant said that the tax inspector who did mine would have got a black mark for so little return given period of investigation but not sure what to believe, if they get a commision then it was not much!
As you can see from some of the posts, some people seem to be under the impression that the insurance protects them from tax investigations.
Thanks guys, interesting stuff.
Alas there's no point in me joining the FSB now as come the end of November I'll no longer be self-employed (fingers crossed). I have just reminded my GF though, who is a member of the FSB, about their cover so she can ignore her invoice from the accountants at least.
Cheers,
Rob
Alas there's no point in me joining the FSB now as come the end of November I'll no longer be self-employed (fingers crossed). I have just reminded my GF though, who is a member of the FSB, about their cover so she can ignore her invoice from the accountants at least.
Cheers,
Rob
Eric Mc said:
AdeTuono said:
Dave_ST220 said:
Join the FSB, you'll get the same cover & extra benefits
I joined the FSB yesterday, and, as you say, it was a big selling point. The rep said that of the 200,000+ members, only around 140 per year are investigated, as their client representatives are generally themselves ex-IR, and refuse to be intimidated.Total cost of membership was around the same as I pay for my accountancy insurance.
Having been on the end of a (routine) VAT inspection, anything that means I haven't got to deal with C&E or IR is alright by me.
[quote=henna777The post made me check mine, I use Abbey tax and just had their renewal in at £278.00 for the year, seems it has slowly gone up over the years. However, a very worthwhile cost as I was investigated for the 1999/2000 tax year. You are not obligated to meet inspector, accountants are not allowed to even mention that investigation is insured and does save several thousands of squids. After 8 months of investigation I had to pay £580.00 for an item that should have been written down over 3 years instead of 1 year and a few squids interest. Does this premium seem a lot though??
[/quote]
Seems expensive to me. The standard Icon tax investigation insurance is 70 nuggets and I up'ed my cover and it's now costing me 90 nuggets. Guess it depends what's covered in your policy. For instance, the Icon policy doesn't include employers and public liability cover - that's included in my home office policy, which incidentally is pretty good value as well at under 200 nuggets.
[/quote]
Seems expensive to me. The standard Icon tax investigation insurance is 70 nuggets and I up'ed my cover and it's now costing me 90 nuggets. Guess it depends what's covered in your policy. For instance, the Icon policy doesn't include employers and public liability cover - that's included in my home office policy, which incidentally is pretty good value as well at under 200 nuggets.
Seems expensive to me. The standard Icon tax investigation insurance is 70 nuggets and I up'ed my cover and it's now costing me 90 nuggets. Guess it depends what's covered in your policy. For instance, the Icon policy doesn't include employers and public liability cover - that's included in my home office policy, which incidentally is pretty good value as well at under 200 nuggets.
[/quote]
Hmm, I might just check this out further today. My companies turn over <£5m so at the "cheaper" scale, those up to £10m are just under £400 for cover and above that you have to refer to Abbey. Will report back!
AdeTuono said:
Dave_ST220 said:
Join the FSB, you'll get the same cover & extra benefits
I joined the FSB yesterday, and, as you say, it was a big selling point. The rep said that of the 200,000+ members, only around 140 per year are investigated, as their client representatives are generally themselves ex-IR, and refuse to be intimidated.Total cost of membership was around the same as I pay for my accountancy insurance.
Having been on the end of a (routine) VAT inspection, anything that means I haven't got to deal with C&E or IR is alright by me.
Beacuse there are many kinds of tax, there are many kinds of tax enquiries or investigations.
Most people tend to think of Income Tax investigations or, if running a limited company, a Corporation Tax investigations.
Income Tax enquiries (this the term they tend to use these days rather than "investigations) can occur for a number of reasons. The most common one is an "aspect enquiry" where the Revenue are concerned about some aspect of the details returned on the Self Assessment tax return. This can be down to the tax payer failing to disclose some income - which the Revenue amy already know about. Or it might be that the tax payer has inserted the correct data in the wrong section of the return.
For those who are self employed, there is the added complication of making sure that the accounts prepared are in compliance with GAAP (Generally Applied Accounting Principles) and that the technical aspects of Capital Allowance and other "tax" claims (as opposed to business expenses) are carried out correctly. With business accounts, there is also the need to ensure that any significant variances in the figures are adequately explained. Failure to make such explanations can lead to an enquiry being raised.
The sam basic points regarding accounts and business tax computations are also relevant for limited companies. The Revenue may also pick up on limited company accounts which seem to be lacking in disclosure notes or if they feel that the disclosures made are inaedquate or not in accordance with Company or Corporation Tax rules.
Most people tend to think of Income Tax investigations or, if running a limited company, a Corporation Tax investigations.
Income Tax enquiries (this the term they tend to use these days rather than "investigations) can occur for a number of reasons. The most common one is an "aspect enquiry" where the Revenue are concerned about some aspect of the details returned on the Self Assessment tax return. This can be down to the tax payer failing to disclose some income - which the Revenue amy already know about. Or it might be that the tax payer has inserted the correct data in the wrong section of the return.
For those who are self employed, there is the added complication of making sure that the accounts prepared are in compliance with GAAP (Generally Applied Accounting Principles) and that the technical aspects of Capital Allowance and other "tax" claims (as opposed to business expenses) are carried out correctly. With business accounts, there is also the need to ensure that any significant variances in the figures are adequately explained. Failure to make such explanations can lead to an enquiry being raised.
The sam basic points regarding accounts and business tax computations are also relevant for limited companies. The Revenue may also pick up on limited company accounts which seem to be lacking in disclosure notes or if they feel that the disclosures made are inaedquate or not in accordance with Company or Corporation Tax rules.
Dave_ST220 said:
Can i ask how much it was? It used to be on their site but last time i checked they had no prices. OT for Eric, is there any system to tax a investigation? I've paid shed loads of tax (over £20K in the last 12 months) so would this make me a target or do they target those who declare no tax?
Depends how many people in the company. Registration fee is one-off £30 in each case, with annual subs between £120 (sole), up to £870 (between 101-150 employees). There are 9 in my company, and subs are £220/annum.
We'll see if it was worth it in time, but that's around what I pay in insurance anyway.
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