I recently picked up a client, who mentioned that their previous adviser offered them tax enquiry insurance.
The previous adviser apparently offers an 'insurance policy which equates to an hours fees'. This seems to be offered to all clients (obviously if everyone takes up the insurance could be a nice little earner if not many enquiry notices received!
My initial thoughts were whether this is legal? Shouldn't an insurance policy be regulated by FSA? Surely there would be insurance premium tax?
We offer tax enquiry insurance through one of the usual channels but if we could 'pocket the premium' I'd be keen to do it! but not convinced it is ethical or legal
Any comments gratefully received
Replies (2)
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We have had this question before
Self insuring is apparently illegal so the previous adviser was a bit naughty (assuming your client understood what was happening). At least one of the legitimate providers offers a scheme for a flat payment to the accountant on the opening of an enquiry. It may have been that.
correct - you cannot offer insurance
Phil is correct. However, I have often thought that any form of fixed fee involves an element of insurance, as the risk of cost overun is assumed by the person doing the work.
So what prevents you from billing your client a fixed fee for their tax work, including dealing with any revenue queries arising from it?