Protect against the cost of tax investigations

Tax investigation insurancePicture this: you’re adding the finishing touches to a client project when you receive notice of an HMRC investigation. Did you know that the legal costs of a tax investigation could run into thousands of pounds? That the fines issued can be substantial? And that the case could take more than a year to resolve?

In this article, Mark Ling, Associate Director at GMC partner One Broker, explains how Legal Expenses Insurance (LEI) could help you in situations just like this.

What is Legal Expenses Insurance?

Legal Expenses Insurance (LEI) is an insurance policy that helps your business cover the expenses involved in defending a legal case, such as an employment claim, contract dispute or HMRC investigation. For any business, a legal case is a stressful process, but for small businesses and sole traders, the costs of defence could cause your business to fail.

Expenses might include hiring a solicitor or legal representative to handle the case. Alongside their fees, you may need to fund court costs and other charges related to the legal process. An LEI policy can be used to help cover these costs, as well as funding alternative dispute resolution methods such as mediation or arbitration in order to avoid a case going to court.

However you use it, a Legal Expenses Insurance policy will ensure that you have expert support and financial protection, giving you peace of mind.

IR35 supportWhen can it be used?

Policies include a wide range of protection, although this will vary according to the insurer. However, they typically cover scenarios including:

 – Employment disputes, such as claims of wrongful termination, discrimination and harassment.

 – Contract issues, including disagreements over the terms of contracts, breach of contract claims, or disputes with suppliers or clients.

 – HMRC investigations, tax enquiries, PAYE and VAT disputes as well as challenges related to IR35.

 – Jury duty. If you are self-employed and required to attend a jury service, some policies will cover the cost of lost earnings while you fulfil your duty.

It is also worth highlighting that some policies also cover the costs of your opponents’ fees if you are unsuccessful in defending a claim.

What isn’t covered?

As with other insurance policies, there may be exclusions and limits on coverage amounts. It’s essential to review the terms and conditions of your policy wording to understand what is covered and what is not.

For example, Legal Expenses Insurance cannot be purchased to cover existing, ongoing legal disputes. It is intended for protection against unforeseen future events.

The benefits of Legal Expenses Insurance

Running your own business can be stressful even at the best of times. But adding a tax investigation or legal claim can compound that stress, especially when you’re a small business with limited resources.

Legal Expenses Insurance provides peace of mind that you will have access to expert professional help in the event of a dispute. Knowing that your legal fees and representation will be covered in a wide range of scenarios leaves you free to focus on running your business and satisfying your clients or customers.

Find out more

Speak to Mark Ling at One Broker to arrange a quotation for your business. He’ll explain the cover and the cost so that you can find the right cover for your business. Simply email gmc.members@onebroker.co.uk or call 01223 949022 to learn more.