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Author: Mike Scales, TFPI Consultant

Talking Tax: January 2022

TFPI Market Update for January 2022: The expected increase in claims is starting to come through the insurers as a matter of process by the HMRC compliance and enquiries regimes, especially in light of the governments need to recoup some of the various £350+b Covid business and taxpayer assistance schemes, many erroneously granted in the first instance if the latest media reports are to be believed.

Group of companies subject to a cross enquiry

HMRC opened enquiries into four companies belonging to one group, undertaking a complete review of all books and records connected with corporation tax, PAYE and VAT.

Following a visit, they raised a number of issues. The client’s accountant dealt with the matters and robustly defended the groups’ position.

Over a period of months, the issues narrowed and eventually only a small adjustment of tax was made for less than £10k, however, the accountant fees incurred were well in excess of this.

TPFI cover expanded to include clients who were missing out

The practice, a large accountancy firm based in Devon, was experiencing problems with a section of clients being excluded from their TFPI policy on the grounds of being consultancy-only clients as opposed to appointed general tax agent clients. Premiums being levied were also exceptionally high. The practice was worried about the treatment of open claims and other online technical services being used from the same primary TFPI provider group if they changed providers.

Zeal reviewed the TFPI policy in detail, confirmed that their current provider was entitled to exclude the consultancy-only clients based on their T&Cs, which they were initially not being flexible enough to accommodate within the scheme. We also did a premium comparison with another major provider, using the exact claims profile as provided by the practice. All other services were reviewed and compared (marketing support, helplines, auxiliary services) for effectiveness and cost (where relevant).

A whole TFPI market review report was provided for their ongoing reference. On negotiation with the alternative TFPI provider, we secured a better policy in both headline value and range of events covered, which also included the consultancy-only clients at standard rates. Using a more expansive and detailed view of the existing claims profile, we assisted the competitor provider who tendered much better premiums for the whole scheme by some £17k, 18% off the existing cost, and guaranteed for 3 years based on certain future conditions. We also found a more effective online technical resource at a better cost from a recognised national market leader in the field.

Despite the better options made available from our consultancy, the client was very worried about the ongoing treatment of several large open claims, and the potential loss of in-group discounts on other products. We then assisted in the negotiation between the accountancy practice and their existing provider, getting their acceptance of the consultancy-only clients (at the scheme’s standard rates) and premiums were adjusted downwards as well. The technical online resources remained with the incumbent provider but were put “on notice” about service and quality standards moving forward. The client achieved a better scheme covering all of their clientele, at a lower cost and the promise of better service from their existing provider. Job done!

Reasons to have a good TFPI scheme in place

A few specialist insurers have over the years designed and promoted various TFPI products that offer a variety of cover elements and services. But there is a minefield of differences between TFPI insurers and providers. Some insurers or scheme providers have wonderful marketing materials, admin and onward sales support, whilst others have excellent policies and claims facilities – but little else.

Headline cover values may look similar, but many have inner limits or restrictions of cover that vary quite substantially between insurers – it is too easy to be fooled by headline, it is very often the small print that makes the difference between a poor, average or good policy. 

Here are 5 reasons why it’s important to choose the right scheme for your practice and client’s needs.

  1. Recovery of Professional Fees – Your practice is able to react to HMRC unhindered by the clients’ affordability or willingness to pay additional costs that arise from defending them.
  2. Client Retention – Having the ability to protect the client from unexpected HMRC enquiries helps the client / practice relationship to remain healthy without any extra stress from additional billing. 
  3. Client Protection – The additional value-added services that some insurers provide such as HR, H&S or Legal Helplines also add real value to the clients as well. It also means the client does not have to accept unreasonable Tax demands and can fight HMRC when and where relevant.
  4. Practice Income Generation – There can be a decent mark-up made on the scheme / insurance when on-selling it to clients, whether it be on a compulsory or client decide basis. 
  5. Best Practice – Most professional accountancy bodies recommend that practices have a TFPI scheme in place, or at least avail their clients the opportunity of having a scheme – having a scheme therefore aids the practice when being Compliance Reviewed by such governing or regulatory bodies. 

Knowing what to look for is often tricky. This is where using a Specialised TFPI Expert becomes absolutely relevant, and in the end, more cost effective than doing all the surveys and quote comparisons yourself. For more info or a quote, contact mike@gozeal.co.uk