Tax Investigations Insurance

[Fray]

Hi,

Would much appreciate advice re. Tax Investigations Insurance. I have often heard of these policies and several times have received relevant advertising through the post. My own accountant does not offer this service and I have never had an investigation.

Are these policies any good? Do they cover all investigations from aspect enquiries to full investigations? Do the insurance companies really cough up or are there let out clauses - negligence or tax avoidance on the part of the insured? Can the insured appoint his own tax specialist/representative or does the insurance company insist on their own appointed staff.

Many thanks for any advice.

[AvocadoK]

The policy my firm uses covers all types of enquiry (aspect/full) except fraud. There are rarely any issues about claims, except where HMRC's questions require accountancy work to be done which really ought to have been done as part of the accountancy work. EG they will not pay up for doing a bank reconciliation. With our policy, our firm does the work. With others, the insurer gets its own consultants to do it. All the providers I have come across are sound, professional organisations.

It's a bit like fire insurance. You will probably never need it. But if you do, you will be glad you had it. Costs for dealing with investigations can run into five figures.

[Fray]

Thanks for the reply,
As you say, you never think it will happen to you, so whenever I have come across these policies, have never really paid them much attention.

Can you recommend any of these policies, maybe you're not supposed to do that on this forum. I'm a sole trader. Preferably a company that allows you to choose your own specialist. I suppose the salient question is what the insurance company's interpretation of fraud is. eg. many investigations result with taxes, interest and penalties due. Is that considered fraud?

[AvocadoK]

I've only worked with insurers who provide the service through a firm of accountants rather than direct, so I can't give any recommendations there. As regards fraud, this is very rare. Lots of investigations end up with penalties, but very few allegations of fraud are made. The insurance company will only treat it as fraud if HMRC have made that allegation.
Hope that helps a little.