Insurance Claim Questions

We have listed below some of the frequently asked questions and answers in respect of our claims service which we hope you will find useful.  If you have further insurance claim questions in relation to your Tax Fee Protection Insurance, please contact us.

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Fee Protection Insurance Claim Questions and Answers

Q1. What HMRC tax enquiries and compliance checks are covered by the Vantage Fee Protect policy?

A1. The professional costs of defending clients in the vast majority of HMRC enquiries and compliance checks are covered. For full details, please see our Policy Summary or our Policy Document.

Q2. On what date does a tax enquiry or compliance check start for the purposes of the policy?
A2. The date on which a letter, notice or other communication is received from HMRC indicating that an enquiry or review is to be undertaken, or any other incident occurs that might lead to a claim. Our claims team should be notified without delay if any such incident occurs within the terms of the policy, or if a potential claim is anticipated.

Q3. When is authorisation given to carry out the work?
A3. Up to £1000 of fees can be authorised on the day the incident is notified. Authorisation for further fees is given on receipt of the claim form if required. Payment of any fees initially authorised will only be made if the claim is accepted.

Q4. What if the authorised fees are insufficient?
A4. If it appears that the fees authorised are likely to be insufficient because the enquiry has not been settled within the time or costs originally envisaged, an increase in the authorised fees should be sought immediately.

Q5. Can a claim be made if a tax return is submitted late to HMRC?
A5. Yes, providing that the return in question is submitted no more than 90 days after the statutory filing date. This applies to all statutory tax returns.

Q6. What if a tax return is submitted to HMRC with provisional figures?
A6. Providing that the return is amended within the statutory time limit for an amendment, this will not affect the eligibility of a claim. Wherever possible, any provisional figures should be based on reasonable estimates to minimise the likelihood of HMRC challenging the return.

Q7. Can tax specialists be consulted by the practice when dealing with HMRC?
A7. Vantage Fee Protect specialists are on hand to assist at the request of the practice but external specialists may be consulted with our consent. Where specialists are nominated by the practice in advance and their charge out rates are specified in the policy period agreement, their normal hourly rates may be claimed. Where this is not the case, charge out rates will normally be restricted to the highest hourly rate agreed for the practice. In all cases, Claims should be notified before costs are incurred on specialists.

Q8. Can the costs of preparatory work prior to a meeting with or visit by HMRC be claimed?
A8. Reasonable costs of preparing for a meeting with HMRC or a compliance visit may be claimed. Each claim will be reviewed on its merits but, generally speaking, preparatory costs should be a relatively small part of the overall claim. The aim of any preparatory work should be to forestall further or unnecessary queries by HMRC and to reduce the overall costs of the claim.

Insurance claims questions – costs

Q9. What preparatory costs would Vantage Fee Protect consider to be “reasonable”?
A9. Examples of reasonable costs include:

  • A brief review of the working papers relating to the preparation of the relevant accounts or tax return to establish whether any issues concerning the tax under enquiry by HMRC were specifically considered. A detailed time-consuming review should not be necessary before a meeting or visit.
  • The client may be given an overview of what to expect at a meeting with or visit by HMRC, usually just before the meeting or visit. In some circumstances, it may be appropriate to advise the client not to meet HMRC, in which case such advance preparation would not be necessary.
  • Preparing explanations for issues that HMRC has indicated prior to the meeting will be the subject of discussion. This should be an overview of general facts or principles, not fully detailed responses, which should be given subsequently in reply to queries actually raised.

Q10. What preparatory costs would Vantage Fee Protect not accept as part of a claim?
A10. Examples of costs that would not be accepted include:

  • A detailed review of the books and records supporting the accounts or tax return. It should not be necessary to revisit the work that was done to prepare the accounts or return in question.
  • Additional work second guessing what queries might be raised by HMRC during the enquiry or compliance check. Such work would be totally unnecessary if HMRC did not raise the queries that were anticipated. The practice should respond to enquiries actually raised by HMRC.
  • Coaching clients how to respond in detail to every question that might come up during a meeting with or visit by HMRC.

Q11.  Can the costs of representing a client at a VAT or PAYE/NIC compliance visit be claimed?
A11.   If someone from the practice decides to attend a records review or compliance check by HMRC, any costs incurred during the records review itself will not be covered under the policy. The costs that will be covered include:

  • Time spent during an initial meeting or discussion with HMRC prior to the records review. It is envisaged that any such meetings, generally speaking, would be quite short. The time spent should be limited to giving necessary explanations about what is in the books and records, and any obvious points that were identified by the practice during the preparation of the relevant accounts or tax return, in so far as such issues relate to the tax which is the subject of HMRC’s enquiry or compliance check.
  • Subsequent meetings or correspondence dealing with the issues raised by HMRC.
  • Where there is clearly a potential saving in time or costs relating to the enquiry or compliance check by pointing out relevant matters to HMRC at the outset, the costs associated with that would be accepted as part of the claim, providing that Vantage Fee Protect agree that the approach taken has reduced or will potentially reduce the overall level of costs claimed.

Q12. Does there have to be dispute with HMRC about the amount of tax at stake in a VAT or PAYE/NIC compliance check before a claim may be made?
A12. No. The costs of responding to HMRC can be claimed from the outset. Whether or not there is such a dispute is irrelevant. For that reason, Vantage do not make a distinction regarding so-called “pre-dispute costs” to which some Tax Fee Protection providers apply a lower limit.

Insurance claims questions – tax avoidance, dishonesty, record keeping

Q13.  Are tax avoidance schemes covered?
A13. In most cases, tax avoidance schemes are marketed with their own ‘fighting fund’ to cover a challenge from HMRC. Unless Vantage Fee Protect has approved the scheme in question in writing prior to its adoption or prior to any enquiry arising, no professional fees will be covered. For the definition of “tax avoidance scheme”, please see the Defintions section of the policy document.

Q14. What if a client has acted dishonestly?
A14. Where HMRC alleges dishonesty or fraud, the claim is likely to be restricted from the point at which the allegation is made. However, fees will not be refused retrospectively. Enquiries under Section 60 or 61 of the VAT Act 1994 will be covered, provided that at the culmination of the investigation the client is not found guilty of dishonesty, fraud or fraudulent intent. Criminal investigations and Civil Investigation of Fraud enquiries conducted under HMRC’s Code of Practice 9 are not covered by the policy.

Q15.   Are there any conditions regarding record keeping?
A15.   Clients are expected to keep prime records. Where this is not the case and additional costs arise because of poor records, the claim may be restricted. In any case we would not cover the costs of reconstituting records.

Insurance claims questions – interim bills, VAT and invoices

Q16.  Can the practice issue interim bills to Vantage Fee Protect?
A16.   As long as the required copies of key correspondence have been sent to Vantage Fee Protect by the practice as the claim progresses, interim invoices will be accepted and paid. This enhances cash flow for the practice and keeps Vantage Fee Protect up to date on the costs being incurred.

Q17.  Who will pay the VAT on invoices, where the practice is the insured party on a Non-Regulated scheme?
A17.   As the practice is the policyholder and insured party, the work invoiced is the subject of an insurance claim and HMRC has accepted that this is outside the scope of VAT. On a Non-Regulated Scheme, the practice should therefore invoice the net costs, excluding VAT, to Vantage Fee Protect.

Q18.  Who will pay the VAT on invoices, where clients are the policyholders on a Regulated Scheme?
A18.   The practice should issue an invoice to the client and send a copy to Vantage Fee Protect. Clients who are VAT registered will be able to reclaim the VAT in the usual way. Where the client is not VAT registered, the insurer will pay the gross amount including VAT. Where a client is partially exempt, the insurer will pay the gross amount including VAT. Where a client is using the VAT Flat Rate Scheme, the scheme percentage used includes an allowance for VAT incurred on purchases or expenditure, and therefore the insurer will pay the net amount excluding VAT.

Vantage Fee Protect Customer Testimonials

Having changed over to Vantage a couple of years ago we have been very satisfied with the service. Especially the claims handling and technical advice lines for both our firm and insured clients on employment and business legal matters. The webshop Vantage offer allows our clients to join and pay electronically. This positively impacts our bottom line and makes things simple and efficient for our clients.
Linda Giles Chartered Accountant

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