Fee protection insurance is an insurance policy which accountants offer to their clients. In the event of an investigation by HM Revenue and Customs into a taxpayers affairs, the policy would pay the accountants fees, which, depending upon the depth of the investigation, may be substantial. The idea, as with most insurance, is that it provides peace of mind. We tend to find that prospective clients ask about it, as they may already be paying it with their existing accountant.
Fee protection insurance works like any insurance policy. We offer it to our clients, who have the choice of taking it out or not. The cover will last for a year and should cover any investigations during that period. The policies are profiled and can cover sole traders, partnerships, partners, limited companies and company directors.
However, we do NOT offer fee protection insurance.
We’ve looked into it a couple of times over the last 10 years. There is obviously a compelling reason to offer it, to ensure that our clients won’t be out of pocket if they are chosen. We would also make commission on any policies. However, there are 3 basic reasons why we don’t currently offer it:
Low rate of investigations
We have found that our clients have been subjected to a very low rate of investigations. We therefore believe that this type of insurance is not essential.
It is provided by business groups
We understand that membership of the Chamber of Commerce and the Federation of Small Business (FSB) provides you with fee protection insurance. The subscription levels are comparable with the insurance premiums. If you really want this cover, it makes perfect sense to become members of either the Chamber of Commerce or the FSB, which provide a lot of other benefits, than simply taking out a stand alone insurance policy.
Little interest from clients
In deciding whether fee protection insurance would be of interest to our clients, we have asked a few. The feedback we got was that clients weren’t particularly interested in taking it out.
For these reasons, we see little benefit in actively pushing an insurance product which not many people want, which can be sourced elsewhere and which isn’t likely to be needed.