Accountancy firms which advise on tax avoidance schemes have been warned that their professional indemnity insurance renewal could take longer than before.
The accountants’ professional organisation, the ICAEW, says that professional indemnity insurers are taking a cautious view of insuring firms that advise on tax avoidance and tax mitigation schemes. It has also said that practices which simply introduce clients to other firms for tax advice could face closer scrutiny by insurers.
“HM Revenue & Customs has been taking a far tougher line on tax avoidance schemes in recent years which has resulted in a number of high profile negligence claims against accountants,” said James Burgoyne, Director – Claims & Technical, Brunel Professional Risks. “This has fed through into the insurance market and we are seeing underwriters being far more cautious about insuring firms with an exposure to tax advice work. Firms may be asked to complete additional questionnaires which ask for more detail about their tax practice and what procedures they have in place to minimise the risk of claims.”
Brunel provides risk management advice to support its clients in setting up effective procedures which can help to reduce the cost of PII insurance premiums. Guidance on PII for accountants appears on the ICAEW website.