Do I Need Tax Investigation Insurance With an Accountant?

Having an accountant does not mean your accountant’s fees to defend you in an HMRC enquiry are already covered. If HMRC opens a compliance check, your accountant usually charges, often by the hour, to gather records, answer questions and represent you. Tax investigation insurance pays those professional representation fees so you get a proper defence without worrying about the bill. It is why many accountants recommend it. Solar Protect can cover up to £100,000 of your accountant’s fees.

It is a fair assumption that once you pay an accountant, everything to do with your tax is taken care of. For your annual accounts and returns, that is broadly true. An HMRC enquiry is different. It sits outside the routine work your accountant quotes for, and the time it takes to handle one is charged on top. This page looks squarely at the decision facing someone who already has an accountant, and why cover can still make sense.

Does my accountant’s fee already cover an HMRC enquiry?

Usually not. Your normal fee pays for preparing and filing your accounts and tax return. It does not pay for the extra hours involved when HMRC decides to look more closely. According to HMRC, a compliance check is carried out to make sure you are paying the right amount of tax, and it can happen whether you are an individual taxpayer or run a business.

When HMRC opens a check, it will normally contact your accountant directly if you use one. Your accountant then has to review the query, pull together records, draft careful replies, and often correspond back and forth over weeks or months. That work is real, and it is billed. So the question is not whether your accountant will defend you. It is who pays for that defence. We look at that in detail on our page about who pays your accountant’s fees in an HMRC enquiry.

Why does an enquiry cost extra even with a good accountant?

A thorough accountant is exactly the reason an enquiry can run up fees. Responding properly takes time. Records may need reconciling, explanations need drafting, and meetings or written exchanges with HMRC have to be managed carefully. The better the defence, the more hours it can take.

This creates an uncomfortable position. Without cover, you may find yourself weighing the cost of your accountant’s time against how hard to push back. That is not a choice anyone should have to make when their figures are correct. Tax investigation insurance removes it by paying the professional representation fees, so your accountant can do the job properly. You can read more about how the product works on our guide to what tax fee protection insurance is.

What if my return is completely accurate?

Being right does not make you exempt. HMRC can select returns for a range of reasons, and some checks are simply part of routine activity rather than a sign that anything is wrong. Even where a check ends with no change to your tax, the work of proving that still has to be done, and it still takes chargeable hours. An accurate return protects you from extra tax and penalties. It does not, on its own, protect you from the cost of the defence.

Why do accountants recommend this insurance?

Many accountants offer or recommend tax investigation cover precisely so their clients are protected. It means they can act quickly and fully on your behalf if HMRC makes contact, without the awkward conversation about mounting fees. It gives you certainty, and it lets the professional relationship focus on your defence rather than the invoice.

If you are an accountant reading this, or your practice would like to offer cover to clients, our accountant scheme is built for exactly that. If you are a client, you can still take out cover as an individual and continue to use your own accountant.

Can I keep my own accountant?

Yes. A common worry is that insurance means switching adviser or using a panel firm. With Solar Protect you can use your own accountant. The policy is there to pay their professional fees for representing you, not to move your work elsewhere. Directors and partners can be included, subject to the policy limits.

What does the cover actually pay for?

Solar Protect covers up to £100,000 of your accountant’s professional fees for defending you in an eligible HMRC enquiry or compliance check, with no excess to pay. It pays the professional representation fees only. It does not pay any tax, interest or penalties that may be due, because those remain your responsibility whatever the outcome.

In plain terms, it takes the fee risk of a defence off the table so you can respond to HMRC in full. If you want to understand the scope before deciding, see our overview of tax investigation insurance. Solar Protect and Apex Insurance Brokers are part of the same group.

So do I need it if I already have an accountant?

Only you can decide, but the honest answer is that an accountant and this insurance solve two different problems. Your accountant does the defending. The insurance pays for it. Having one does not remove the value of the other. If the prospect of an open ended fee during an HMRC check is something you would rather not face, cover is worth considering.

If you would like to talk it through or see a price, you can get a quote or contact us and we will happily explain your options.

Related guides: tax investigation insurance for sole traders, tax investigation insurance for landlords, tax investigation insurance for partnerships.