I looked into fee protection insurance a couple of years ago, but was disappointed by the salesman's approach who had failed to tell me I needed a licence if I was to receive commission from sales to clients taking up the fee protection insurance. I am now making a fairly good profit, and am wondering whether yo buy a fee protection insurance policy that covers all my clients without making an extra charge to them (thus avoiding receiving commission and all the FSA regulations that go along with that). What experience have other sole practitioners had and would they recommend any particular product? I had a client ring me yesterday who was keen to have the protection in case of investigations by HMRC and I am thinking this might be a good add-on for clients. But what do you think? I very much welcome your experience and comments.
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Replies (9)
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PFP
We are with PFP. It is an opt-in policy and it doesn't cost us anything. We buy the policies for each client who wants it, and have the option to charge them a premium, or sell at cost, whichever we wish. This means the premiums are cost of sales and any profit is profit, not commission.
PFP take our letter headed paper, print letters to our clients and do followup phone calls as well.
I am thinking about a way of covering all clients though, as you know it's the one who wants to save money by not getting the insurance that is going to get a lengthy investigation........
It didn't work for me
I had block cover for clients for approximately 3 years and included the cost within annual services. It cost me many £thousands over the years. The policy was quite comprehensive and covered aspect enquiries, too.
Overall, I decided it was not good value for my money and clients did not appreciate the value of this insurance.
I didn't make a single claim throughout that period. We have had maybe one or two aspect enquiries that were easily dealt with and costs were below the insurance excess. We also had a CIS enquiry against someone who was exempt from CIS.
We ceased block cover and we didn't lose a single client because of this, and none of my clients chose to opt in for individual cover! I don't push the insurance, but I do make sure clients are aware of it's availability. I (and my clients) are fortunate in having a very capable specialist available at reasonable cost, if he should be needed.
Speak to your clients, make sure they are aware that the costs have to be covered and therefore their fees will increase by a small amount (but less than if they bought a policy individually!). Look at your practice history? How many claims could you have made? Do you expect the incidence of enquiries to rise? Is it cheaper to fund the occasional enquiry yourself?
Insurance can be good, but it can also be a total waste of money, especially as it excludes many clients (the ones who are always late with submissions) and anything that happened prior to their becoming your client. Don't be charmed by the Insurance companies into believing the cover will be your saviour and much appreciated by clients.
Taxwise
I have all in policy with Taxwise. I did mean to charge clients, but never got round to it. Till I read this thread I had no idea about regulations on earning commission. I will rethink. I need to recover my premiums somehow.
I cannot comment on how good Taxwise are since I have not had to claim yet. Their tax helpline depends on who answers the call. They are some who should open up their tax learning material again.
We have exactly the opposite experience to Shirley
We insist that all clients are part of it unless they have cover elsewhere. Nobody gripes, and pretty well everyone sees it as a good thing. And it's a good profit centre for us too.
We use CCH and have comparted their cover to the cover FSB members get - which is substantially less comprehensive.
Small Practice Scheme Fee Protection With ICPA
The ICPA have together with Peninsula Taxwise devised the Small Practice Scheme.
Tailored specfically for the smaller practice the scheme is easy to understand, easy to adminster and
comprehensive. There are no lengthy forms to complete, you do not have to provide lists of clients and it
is proving to be extremely popular with our members.
Full details are available from our website at www.icpa.org.uk or call me on 0800-074-2896 if you would rather
"Chat things over".
Tony Margaritelli - Chair ICPA
CCH Taxshield
I operate as a small sole practitioner and about 40% of my clients have signed up. I charge less than the CCH rate for some depending on the circumstances, but more for others, overall a small profit. Some administration time is charged to clients depending on how efficient they are at renewing. Some CCH administration was poor at the start, but has improved. The helpline has been very useful, although for more complex ongoing problems I feel more comfortable paying for advice.
Peninsula Taxwise Small Practice Scheme
I had a chat with the sales guy from Peninsula and the Small Practice Scheme seems ideal for my size of practice.
It covers up to 250 clients for all enquiries upto and including Tier 1 Tribunal Hearings; no excess; covers all clients; reasonable premiums.
I will be looking at the details of the policy over the next several days but, at first glance, it seems to cover everything.
its a good idea
i have had the fee protection for my firm now for the last 4 years and never looking back. although i have used two different provider PFP and Taxwise (my current provider). the way it works with them is that i have my firm insured i.e all clients and £x per company, £xx for sole trader and £xxx for Individuals. I then sell this premium on to the clients at £xyz plus VAT. This is not commission!
It is a good source of income and last year it generated additional income of over £8k. My advice is that you shop around and you might find out that its cheaper to insure all your client as opposed to opt in opt out basis.