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Tax Investigation Insurance - do clients really want or need it?

12th Jul 2013
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In the UK, the majority of firms now offer Tax Investigation Insurance to their clients. Some firms however question whether or not this is something they should offer their clients or if their clients even want it offered to them.

It is now generally regarded as best practice to at the very least offer Tax Investigation Insurance to your clients. HMRC enquiries have risen dramatically over the last few years (As explained by Chris Simpson a senior official at HMRC when he presented in a recent webinar - Charles please add a link to the PFP homepage) . This is also backed up by the amount of additional tax that has been collected and the significant increase in claims reported by the main Tax Investigation Insurance providers. HMRC do investigate firms and individuals at random. So whether your clients like it or not they are at a higher risk of investigation than ever before.

From my personal experience, many of the firms I work with have noticed a significant change in the attitude their clients have towards Tax Investigation Insurance. Many are reporting a significant increase in take up rates amongst clients who in the past might have not been interested in the protection in the past. This could be because they have first hand experience of friends or contacts being investigated or they have read the significant coverage on increased HMRC activity in the national.

Every client will be different but you might find that many are now much more receptive to the idea of Tax Investigations Insurance. (A lack of understanding on HMRC investigations and Tax Investigation insurance is one of the main reasons a client will not take up insurance because lets face it; Would you sign up for something you didn’t fully understand the benefit of?)

Some of the providers will help you mail your clients with non aggressive marketing on the benefits of the protection. Therefore the cost and hassle to you as a firm would be minimal. The decision for you now is: Should you follow the trend set by most leading accountancy firms and least make your clients aware of the product. If you use the right marketing material to suit your clients then you might find in the current climate, take up from clients could be much higher than expected.

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PJ
By paulgrca.net
16th Jul 2013 13:12

Higher risk?

Not sure about that at all.

I have had a single investigation in the past 8 years - prior to that would have always had 2 or 3 cases ongoing at any one time. Shame really as I enjoyed the work and was good for fees.

I do not sell tax investigation insurance and never will. First thing I talk to new clients about is this cover and usually find they have cover with FSB subscription, sometimes included with other trade subscription, has been tagged onto there general insurance by their broker and also their existing agent has sold them a policy so not unusual for the client to be paying 3 or 4 times for the same thing!

 

 

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