Professional fees insurance

By Tolley

The following Personal Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Professional fees insurance
  • Full enquiries
  • Aspect enquiries
  • Business inspections
  • VAT disputes
  • PAYE / NIC disputes
  • PAYE / VAT compliance visits
  • Pre-dispute cover
  • IR35 disputes
  • Code of Practice 8 investigations
  • Judicial review
  • Partners / directors cover
  • Exclusions

Professional fees insurance has been popular since the start of Self Assessment inthe mid 1990s. Self Assessment heralded the start of the formal enquiry regime and businesses soon emerged which provided insurance covering the professional fees associated with such enquiries.

At first it was commonplace for policies to cover only full enquiries (a full books and records review) but not enquiries into one or more specific aspects of a Tax Return. Less common investigative tools, such as Code of Practice 8 investigations (cases where fraud is not suspected but large amounts of tax may be at stake, typically covering avoidance schemes) were not covered.

Nowadays, professional fees insurance is much more sophisticated. Different terms can be discussed with the various providers but typically, some or all of the following types of enquiry might be covered.

Full enquiries

These involve an extensive examination of the tax position of an individual, partnership or company. HMRC will consider all aspects of the Self Assessment Return and undertake a comprehensive review of all books and records underlying the entries made on the Return.

Aspect enquiries

This is where HMRC enquires into one or more aspects of the Self Assessment Tax Return. This can range from a simple clarification of particular entries to detailed consideration of whether those specific entries have been treated correctly for tax purposes.

While it may involve a check of the records on which the particular entries were based, it will not involve a full books and records review.

Business inspections

HMRC can visit business premises inorder to inspect those premises, documents and assets. Certain visits require approval of the Tax Tribunal or an 'authorised officer' of HMRC.

It may be that routine business inspections which have not been approved by an 'authorised' officer are not covered by

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