Talking Tax: June 2022
Author: Mike Scales, TFPI Director
Having recently read several articles by various TFPI providers, a few consistent themes come across, dependent on the insurer’s point of view about the market. These can be broken into four main areas:
1. The increasing HMRC enquiry activity.
2. The increasing need for technical tax support.
3. The squeeze on competitive premiums.
4. Quality cover should be more expensive.
At Zeal TFPI we sit between the insurers and accountancy practice clients, providing unbiased data and real life opinion on the TFPI market. Our job is to sort out the wheat from the chaff for our clients. We agree with the first three points above, but definitely not the last.
Let me explain:
Yes, one always needs to ensure that quality cover is provided … having an insurance policy that doesn’t react properly to the clients’ requirements or satisfaction when a claim is made is pointless … it needs to provide proper security and guarantees.
Doing detailed comparisons on the main TFPI players’ policies and administration capabilities provides an insight as to which insurer is actually providing the best, or at least competitive, cover. Our process also shows which insurers try to validate that their premiums are more expensive than others as “their cover is superior”. All too often the reality is that the one making the most noise about this topic are the ones that in fact do not have the best policy in place.
At the same time, other insurers boast about their headline cover values in their marketing but actively avoid mentioning the small print that depletes the value of the claim. Not good for anyone other than the insurers.
Having the perfect mix of cover vs cost is difficult, but not unachievable. It takes awareness of what HMRC are doing in respect of enquiries and investigations; of which industry or trade they (HMRC) are focusing on at any given stage; it takes awareness of how accountants deal with such activity and their clients’ requirements; it takes skill in proper claims related underwriting based on accurate data from all sources and a full understanding of the tax laws; it takes efficiency in scheme administration and the support services that policy holders need and use; and lastly, it takes a long term business model with financial stability. Very few insurers achieve this mix. Our consultancy process identifies the differences between insurers.
As for the first three points mentioned at the start of this article: Yes, HMRC are exponentially increasing their activity in multiple areas. Yes, more and more accountants need (and use) the insurer’s specialist tax and VAT technicians (instead of employing their own). Yes, premiums are very competitive, as they should be, in the interest of the consumers.
Zeal TFPI is a specialist consultancy providing technical and market comparisons in the tax fee protection insurance arena exclusively for accountancy practices.
Contact Mike Scales on firstname.lastname@example.org or select a date for a time to chat with me to see how we can save you time, money and effort in attaining better TFPI solutions.