Newth Talks Tax: Fee protection

Nicola J disclosed, on 22 November 2007, that she had again offered her clients fee protection cover, offered by one of the leading insurers, and was interested to know from others what a typical take up rate was. Despite some excellent support from the practice's insurers with the marketing, and Nicola's best efforts with chase up letters and telephone calls, the practice struggled to obtain just under a 25% take-up rate, which seemed very poor.

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Comments

"Very few of my clients suffer full investigations and that’s al

AnonymousUser | | Permalink

That may be the case with some providers but mine (Qdos Taxwise) provide aspect enquiry cover too.

bookmarklee's picture

Survey

bookmarklee | | Permalink

John
Please have a word with me next week as I may have some useful insights especially as regards one major provider which has created a unique facility for the accountant members of my network.

I talk about the options during many of my talks for accountants and it's fair to say that audience views are as polarised as those above. I also invariably hear about firms that provide their clients with the facility without any hassle as regards the investment business regulations; they outsource all the admin and only have positive words for their insurer (no one provider standing out in his regard).

I must admit that I’m torn. If I were still in practice I’m sure I’d want to ensure that my clients had this sort of cover. Equally I’m aware that most of the insurers provide a tax helpline and can (or, in some cases, insist that the insurers) undertake the related professional work to defend a client from an HMRC challenge. And such helplines and tax support services are in direct competition with the facilities provided by my Tax Advice Network.

Before reading the above summary I tended to summarise the alternative views as follows:
• Can’t see the need for it. Very few of my clients suffer full investigations and that’s all these things cover isn’t it?
• Tried it once but cancelled when the insurers wouldn’t pay out on a claim;
• Happy to tell clients about this and let them decide whether to take out a policy or not;
• I want my clients to be covered so that I can be confident that my fees will be covered in the event of an investigation;
• Most of my clients are members of the FSB and so they have cover through that scheme;
• Our firm is so large that it’s hard to formulate a consistent approach that would satisfy the insurers;
• We make a good return on the premiums that we sell to our clients - in effect by providing an additional valuable service to our clients we also benefit through an additional and profitable residual income stream;

NB: I heard about an 8 partner firm recently where only 4 of the partners tell their clients about the availability of fee insurance. I tend to think that such a firm may be at risk of invalidating their PI policy. One of the standard terms tends to be that clients will be given ‘best advice’. How secure are they if half of the firm’s clients receive advice that the other half don’t receive?

Mark Lee
Tax Advice Network

Tax Default

Anonymous | | Permalink

David, I suspect, but stand to be corrected, that this refers to a client who has failed to submit a return within the deadline and is therefore subject to a penalty for late filing. Our insurers will not cover such cases, presumably on the basis that the client has brought the enquiry on themselves. Seems fair enough.

What is a tax default?

David160 | | Permalink

What is a tax default?

You said:-

Andrew stressed the point that some insurers may refuse to honour claims where the client has committed a tax default.

Does this mean that if the inspector finds anything wrong whilst doing the enquiry, the insurance company will not pay any of the fees?