D&O Run Off Policy & Director Personal Tax Relief

Is D&O policy classed as a personal tax allowable employment expense when paid by the director?

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Hi,

A friend of mine was the sole director of a private company which went into administration. It was PE backed and he had no equity stake in the organisation. The business was sold via a pre-pack to a customer leaving trade creditors with some unrecoverable debts. Given that this was the second time the business had done this in 18 months there may be some aggrieved creditors who wish to take legal action against the director (who has stayed in post in the new company) and he has decided he wants to purchase run-off cover.

He's asked me if this is tax deductible against his employment earnings? As this cost would not be incurred if he had not been employed, and if the company had paid this before it became insolvent then it would be tax deductible (the PE house is not going to reimburse him for the cost).

I must admit I'm completely stumped by this question as it's not something I've come across before, so any help you could give would be gratefully recieved!

Thanks

Dave

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By Tim Vane
17th Jan 2017 22:46

Are you the same Dave from down the pub? Keeps advising people to try all sorts of whacky schemes?

I can offer you a little help: "i" before "e" except after "c".

You're welcome.

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