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Fee Protection Insurance

Fee Protection Insurance

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I've decided that it's high time we invested in an all client fee protection insurance policy.  Just for background I set up the practice four years ago.  In the first 2-3 years we had virtually no inspections, enquiries or checks so this wasn't an issue for us.  However as the client base has grown and we have more history with clients we're starting to get a few more coming in.

There's hardly a glut of these, only a handful of very simple checks so far this year (e.g.: large refund claimed on first VAT return, can we provide details, check on dividends as didn't match final accounts [only a timing thing, no actual issue on that one]).

However as we grow and have even more history there can only be more of these cropping up in future.  Also we're doing some more complex work where we can expect HMRC to want to check things.  My experience to date is that clients get spectacularly unimpressed when, after having the bad news there is a check, we hit them with the news that we'll have to charge them for dealing with it.  As a result, frankly, we don't get paid properly for dealing with these cases.

Therefore I think we ought to take on an all client policy.  I tried client decide a couple of years ago and had precisely zero clients saying they wanted it.

Now I want to make this mandatory for all clients by building the protection into the annual fee.

My questions are:

1. Which providers would the community recommend?

2. Am I correct that this is a good idea?

3. For a fairly small practice (<£100k fee income) how much should I be paying (if you'd be kind enough to share)?

Thanks in advance

Replies (33)

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Man of Kent
By Kent accountant
30th Oct 2015 11:28

Taxwise

Have been with them for 3 years +. Whole of practice cover is priced by number of clients, for say 100 clients the fee would be approximately £200 per month - obviously up to you to negotiate.

In the first year I invoiced all limited companies separately to cover the costs.

Now pass the cost onto clients, its included as part of a fixed fee offering as standard.

All claims have been approved quickly - haven't had any turned down - you'll be pleasantly surprised what you can claim for.

I'd say its a no brainer.

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By cheekychappy
30th Oct 2015 11:33

I would be seeking another accountant if my accountant insisted that I take out an insurance policy that I didn’t want or need.

In answer to your questions:
1. Tax Wise
2. No
3. No idea.

I make my clients aware of the risks of being inspected, outline that in the event of an inspection this is additional work to what I am engaged to do and it would be chargeable at my hourly rates.
I let them know that there insurance policies available to them to cover my costs. I recommend Tax Wise after having meetings with several suppliers and they came across the best overall. I also let my clients know there are other insurers on the market but to ensure that should they take out a policy, the policy meets their needs.

If I wanted, I could earn a bit of commission from it. But for how many clients want it, it is not worth the hassle.

As long as they are aware of the available products, and that the work would be outside the scope of our engagement, there are no nasty surprises for the client in the event of an inspection / enquiry.

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By Glenn Martin
30th Oct 2015 11:40

Another vote for taxwise
I signed up with Taxwise for the reasons you mention.

My fixed fee covers everything apart from additional tax enquiry work so it makes sense to insure that
As small aspect stuff and clients don't expect to pay anything extra.

It works out about £30 per client which just built into the fees. I charged a couple of larger clients £100 each to recoup some costs.
Which they were happy with as they get employer support line which is useful for them.

Not had to make a claim yet but heard from others that they are good to deal with.

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By ChrisScullard
30th Oct 2015 11:47

Thanks for your comments KA. 

Thanks for your comments KA.  Just out of interest how did the clients respond to receiving a bill for the insurance in the first year?

My plan was to basically absorb the cost initially and then add on £50 or so per client when we agree the annual renewal (I always agree fees for new financial year in last month of current year as a matter of course anyway). 

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By ChrisScullard
30th Oct 2015 11:48

My response to KA was being written while the other posts were made - thanks for the input

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By Roland195
30th Oct 2015 11:55

Value to client

I am sceptical regarding the value of this "insurance" to the client. In truth, it seems to have much in common with Payment Protection Insurance - an insurance product sold by non-brokers with little, if any regard paid to suitability and look how that turned out.

The figures quoted in relation to the frequency, scale and cost of enquiry bears no relation whatsoever to my experience, especially in recent years.

 

 

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By rjoconnor81
30th Oct 2015 11:56

Taxwise

We use taxwise all client cover, good cover and claims settled quickly (all three of them in four years).

The tax helpline is also invaluable as we are small practice as well.

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Man of Kent
By Kent accountant
30th Oct 2015 12:25

Client response

@Chris - I wrote to all clients in the first year with a 'reply if you want to opt out style letter (drafts available from Taxwise) - 2 initially 2 opted out thinking the fee was monthly rather than annually, when they both realised what was being offered they opted back in.

Now its included in the annual fee so its rarely queried. The last query I had on this was from a new client who commented 'our old accountant tried to sell us an insurance policy - £250 plus vat'. Bit of a cheek as the real cost is about £20!!  

Second the post on the tax helpline - that has really helped me on a couple of complex vat issues.

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By adam.arca
30th Oct 2015 13:27

My tuppence-worth

I use Taxwise, so that seems pretty universal based on this thread.

@Cheekychappy: yours is the view I always took and I too had zero interest when on a couple of occasions over the years I circulated clients about it. When I did eventually decide that I had to have an offering (mine is a client decide) and circulated a sign up form and literature provided by Taxwise, I was gobsmacked by the level of response.

@Roland: I still tend to take your view and I'm not particularly keen myself on being insured up against every conceivable but nonetheless remote possibility. Nevertheless, the bottom line seems to be that clients like the option, plus (even more importantly from a practice viewpoint) they can't argue they weren't offered anything.

@KA: perhaps the other accountant had a client decide policy (which is considerably more expensive per unit)? If so, you're comparing apples and oranges. You're also not mentioning (although you're presumably aware of) the quite considerable admin time which running a scheme involves and which needs to be recouped (although I would guess there's a fair bit less of that for a whole firm policy tbf). I also charge £250 plus VAT for my largest clients: there's no point offering a £x mill turnover business a policy for say £100 as it just won't be perceived the same way as something moderately expensive and very likely won't be taken up.

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By giannina
30th Oct 2015 13:28

Its Taxwise froim the ICPA as well

Here at the ICPA we recommend and endorse Taxwise so its another vote for them from us.

In reply to your questions a fee protection scheme is indeed a great idea and the way HMRC are behaving it is even more so.

As to cost if you go to our website you will be able to see the cost charged based on the number of clients of our ICPA small practice scheme.

Tony Margaritelli - Chair ICPA

 

 

 

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By Roland195
30th Oct 2015 14:42

Based on what?

giannina wrote:
 In reply to your questions a fee protection scheme is indeed a great idea and the way HMRC are behaving it is even more so.

From my point of view, the way HMRC are currently behaving means fee protection insurance is even less likely to pay off. Business record checks have been abolished (and despite the panic from the profession at large not a single £1 in penalties was raised) and enquiry rates are so low to be barely noticeable - full enquiries always have been rare but corporate ones seems to be non-existent.

HMRC does seem to be more switched on raising aspect enquiries into missing interest, pension etc but these tend to be fairly accurate and take little action to resolve (on the whole, I'm sure we all have war stories). Less time I would imagine, than the administration involved in making a claim anyway.

This ignores the free helplines and carriage clocks that come with the scheme of course.

 

 

 

 

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Caroline
By accountantccole
30th Oct 2015 16:52

CCH (Wolter Kluwer)

We are with CCH.
It is sold to clients as an add on service which they can choose if they want.  I am honest with clients who ask whether it is worthwhile. If they like insurance generally and are in an industry that is likely to be checked (cash business/ building trade etc) I might suggest it is worthwhile.  If their tax affairs are simple and any enquiries are unlikely to take very long, I say don't worry. 
I was a sceptic until a few years ago when a building client had a VAT inspection and I was able to spend a day in advance helping him to tidy his records, and attend the VAT visit at no extra cost to the client. The CCH helpline also helped me prepare for the visit, in terms of how easy to make it for HMRC and how o deal with questions.
I also get access to tax helplines which have a value, clients get access to other helplines so that can be a selling point for businesses.
I make a small profit each year, which covers the extra admin of running the scheme. 
Make sure you understand what licences you need (DPB etc)

 

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By jonnyd
30th Oct 2015 17:16

TAXWISE

Using Taxwise is fine until you claim more than your premium in a year-Then they don't want to know you! They have a we win, you lose policy!

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By ShirleyM
30th Oct 2015 17:34

It wasn't worthwhile for me

I paid for block cover for years, at a cost of several £K per year.

I never got a penny back, as the couple of aspect queries we covered were below the excess amount.

The only enquiries we have handled since were for uncovered new clients who brought the problem to us, so we still wouldn't have got a penny to this day if we had continued with the cover.

Additionally, bear in mind that if clients are in the FSB they will already have some cover, so they won't want to pay again.

As johnnyd says, the insurance companies are always the winners in the end, but if you want peace of mind, and don't mind paying a few £K, then go for it. 

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By Essex FCCA
30th Oct 2015 20:14

Try PFP

I am a member of 2020 Group and through their relationship with PFP, the fees charged are very good on an all client basis. We have in recent years got a slightly better and lower quote than Taxwise, Abbey Tax or CCH. The tax helpline is also very good. I always get quotes each year and try to get the best value for our clients. From what I have seen the level of cover/protection is pretty much similar over the main 4 providers. A lot of it though though depends on claim history and client profiles.

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By Marion Hayes
31st Oct 2015 12:05

CCH (Walters Kluwer) too

This policy is for me!!

I never liked having to take a commercial view when advising a client where HMRC were wrong but only wanted a small settlement as opposed to the high costs of standing your ground. So when I began operating myself I took out an all client policy and have the peace of mind of

1. helplines

2. being able to bring an an expert of my choice where an enquiry goes beyond my comfort zone

3. being able to deal with enquiries quickly and correctly.

I have had a few small claims but not seen premiums rise much so even though it comes out of my profit margin I feel it is well worth it.  

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By daveah
02nd Nov 2015 14:00

Taxwise
Every time.
Great to deal with, reasonably priced, and contrary to a poster above, in 2 of 5 years with them have claimed more than the premium with no quibbles and no premium increase.

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By pauljohnston
03rd Nov 2015 11:20

We have had all practice cover for since 2001

I estimate, maybe longer.

We bill each client a fixed amount depending of type.  Personal tax is cheapest and Ltd Co most expensive,  No client new or old has complained.  Some view it as any other insurance.  We currently use Taxwise.

Go for it and expect to profit on each payment.  The support provided by Taxwise is worth the practice's premium alone and yes we have made a claim - it was easy.

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By cheekychappy
03rd Nov 2015 11:27

Self insure?

Has anybody considered or implemented self insurance? Ie taking a fee and absorbing the costs in the event of an enquiry?

I'll admit I've been lazy and not researched this, so I don't know if it's possible.

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By pauljohnston
03rd Nov 2015 11:46

Cheekychappy

I understand that one has to be registered as an insurance provider to do this.

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By rota2
03rd Nov 2015 12:10

CCH for me

I have about 60 clients and about half have this service, decided on a case by case basis, discussed with each client. I invoice separately at about 1.5 times what CCH charge. This has worked well for the last 5 years.

Very few claims, so one wonders if it is worthwhile, but some clients like the peace of mind.

Almost mandatory for those in business.

The telphone helplines have been very helpful.

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By Red Leader
03rd Nov 2015 12:25

not for me

Have looked at fee insurance in the past but decided against. Managed without for 18 years.

Seemed like too much hassle for not very much. Enquiries these days in my practice are nearly all narrow aspect enquiries.

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By jonsa
03rd Nov 2015 14:30

PFP better than Taxwise

I used to be with Taxwise on a client opt in basis.  Cost per client is higher and every year we reached the all client level.  Moved to PFP and reduced charges (with larger margin) on a client opt in basis - much better.  A key reason is that I supply a csv file and they produce and send all the letters, etc. and pay the postage.  They also chase those who do not join.  Last year 95 joined out of 242 clients and provided £4,000+ towards administration, which was plenty.

No problems with claiming, even for little aspect enquiries and it means a proper fee can always be charged at full rates.  I am very pleased with them.

Years ago I ran a very successful self-insure scheme till the rules changed and had to stop.  That was the cheapest for the clients and we still made some profits from it.

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By North East Accountant
04th Nov 2015 11:34

Check Business Insurance Policy

Like the OP said there was zero interest from clients. Why charge them for something they do not want?

I recommend they check their business insurance policy, to see if they are covered. We are under ours.

Our practice been going over 5 years, never had fee protection insurance and never had a problem.

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By ChrisScullard
04th Nov 2015 14:57

Thanks for the comments

Thanks for all the comments.  Just in response to the one above (and many others similar), my issue is that:

a) clients don't want to pay for the insurance, but

b) when we have to do extra work when there are HMRC checks, etc they don't like paying for it

As a result of b), we're doing high value work but getting paid low value fees for it to maintain a working relationship.  Effectively what we're planning is to take out a policy that insures US against low/non payment for enquiry work.  This obviously gives us an additional overhead, and like all overheads we should build recovery of it into our fees.

Also it has to be a nice marketing play to be able to say 'we include fee protection worth £x' doesn't it?

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By MissAccounting
04th Nov 2015 12:55

Ive always been sceptical of this because the insurers are way too aggressive with their marketing and having met with one they went for the very hard on the spot sell.

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By RBowcott
17th Nov 2015 12:20

Not all insurers are aggresive

I note your comment with interest and at CCH we will tailor all marketing collateral and support to reflect your desired approach to clients.

As the ICAEW`s preferred provider you can be confident in the advice and support we provide, and I thank those who have comments on their positive CCH Experience. This is reflected in our market leading excellent NPS score.

If you would like an informal chat, please contact me in the first instance at [email protected]

Regards

Richard Bowcott

Key Account Director

CCH

 

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By jonnyd
17th Nov 2015 12:45

CCH?

Wouldn't bother getting a quote from CCH-Their premiums are astronomic, esp for a small Practice!

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By RBowcott
17th Nov 2015 13:01

We have launched a specific small practice product which is a cheaper option still covering the main policy conditions and providing help line support. However no two practices profiles are the same so pricing comparisons are difficult.

Im happy to discuss any individual circumstance to find the most cost effective solution.

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By Marion Hayes
17th Nov 2015 13:18

CCH - yes

Sorry jonnyd but you can't get much smaller than me and my premium is reasonable

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By jonnyd
19th Nov 2015 12:39

CCH-No

Hi Marion-Wait until your claims come to more than your premium-You will not see them for dust!

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By pennylj
18th Nov 2015 12:04

1. AbbeyTax 2. Yes, for the clients that like insurance. Some like to insure a particular year where something out of the ordinary happened. 3. Don't know - but do call them. They're lovely ppl, and not pushy. Their helpline can be useful for a second opinion too.

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By peterlashmar
19th Nov 2015 11:26

HMRC Enquiry insurance

All good comments. FYI - Those policies do not usually cover fees for queries arising from HMRC for an exceptional VAT refund application including if they then take the opportunity to do a full VAT inspection.

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