Fee Protection Insurance for Accountants
Fee protection insurance for accountants is an essential safeguard for our profession. In this blog, we explore why this type of insurance is important, what it covers, and the benefits of including fee protection insurance in your coverage.
Understanding Fee Protection Insurance
Fee protection insurance is a specialised policy designed to cover the costs of defending HMRC tax investigations and enquiries. When HMRC opens an investigation into a client’s tax affairs, it can be an expensive process for accountants to manage. Fee protection insurance covers legal and professional fees, reducing the financial strain of such investigations.
Accountants, tax advisors and other financial professionals who represent clients in tax matters should all have fee protection insurance in place, giving clients the peace of mind of knowing that they will be supported if they are investigated, without the burden of additional costs.
Why Is Fee Protection Insurance Important?
Fee protection insurance should sit alongside professional indemnity insurance, public liability insurance and other insurance types in an accountancy practice’s insurance armoury for three key reasons:
Protection Against HMRC Investigations
HMRC has the authority to randomly select businesses or individuals for a tax investigation, regardless of whether they have any history of non-compliance. Even the most diligent of clients can be subjected to an inquiry, which can result in significant professional fees. Fee protection insurance ensures accountants can manage the financial and logistical challenges associated with HMRC investigations without putting their business at risk.
Safeguards Accountants from Unpaid Fees
One of the risks accountants face when dealing with tax investigations is the possibility that clients may not be able to afford the fees associated with defending their case. Tax investigations can be long and complex, requiring significant time, resources and expertise. Unfortunately, some clients may not be able to afford their accountants’ fees.
Fee protection insurance offers a safeguard, ensuring accountants are still compensated for their work even when clients are unable to pay, providing financial stability for accounting practices.
Enhances Client Relationships
Offering fee protection insurance as part of your service can significantly enhance your client relationships. It gives your clients peace of mind, helping to build trust by ensuring that they won’t face unexpected financial burdens in the case of an HMRC investigation. Clients are more likely to return and recommend an accountant who demonstrates that they have their clients’ best interests at heart – and value-added services like fee protection cover can help.
What Does Fee Protection Insurance Cover?
Tax investigation insurance covers a variety of professional fees related to HMRC tax investigations and inquiries.
These include full HMRC tax investigations – including personal and corporate tax inquiries. These can be in-depth, covering several years of financial records which, of course, can lead to significant professional fees.
It also covers self-assessment and VAT disputes, where the cost of defending claims can add up quickly, as well as employer compliance reviews covering PAYE and National Insurance issues, where the legal fees can be costly.
With the number of contractors and freelancers on the rise, IR35 investigations are becoming more commonplace. Fee protection insurance for accountants ensures that the costs associated with these investigations are covered.
How Does Fee Protection Insurance Work?
Cover begins when accountants subscribe to a fee protection scheme via an insurer or provider. This is typically done at a firm level, allowing accountants to offer fee protection to all of their clients. Next, accountants offer coverage to clients as part of their service. Clients are given the option to purchase fee protection insurance as part of an enhanced service offering, building client trust and providing added value.
With these steps complete, the insurance covers the accountant’s professional fees in the event of an HMRC enquiry. This includes professional fees incurred through preparing documents, attending meetings, and liaising with HMRC on behalf of the client – even if the client is unable to afford these fees themselves.
Benefits of Offering Fee Protection Insurance to Clients
There are two key benefits to offering fee protection insurance as part of your client service package:
Added Value to Accounting Services
By offering your clients fee protection cover, you add value to the services you provide. This insurance can differentiate you from your competitors, allowing you to provide tax investigation support where required with no extra cost to your clients.
Financial Security for Clients
An HMRC tax inquiry can be expensive – and HMRC can decide to investigate whichever individuals or businesses they see fit. Fee protection cover helps clients to manage unexpected HMRC tax inquiries without having to worry about the burden of additional costs.
Protect Your Practice with Fee Protection Insurance
Don’t let unexpected HMRC inquiries disrupt your practice or your clients’ financial stability. Assess your risk exposure today and secure fee protection insurance for accountants to safeguard your practice and your clients from unexpected HMRC investigations.
Contact us today to discover how we can help you find the right fee protection policy for your unique needs.
Get the latest news direct to your inbox
Sign up to our mailing list to receive weekly bulletins on all of the latest accounting news.
"*" indicates required fields