Do Away With Confusion About Tax Audit Insurance
Before these business clients finalize their decision, a recommendation given will need them to understand what these products really cover.
Typically, we must differ “Audit Shield Cover” against other “Tax Audit Insurances”, whether it’s a standalone, a management liability policy, or part of a business package. Below is a summary as follows:
- Audit Shield – this will entail no expenses from your pockets if your cover level is doneproperly. It’s the responsibility of your accountant to charge your insurer directly.
- Tax Audit Insurance – here you will have out of pocket excess. You need to pay professional fees in relation to the audit, which can be refunded when the claim is completed. This can take some time depending on the audit.
Typically, it is recognized that the Audit Shield should protect the routine audits that may happen every now and then, and assure no out of pocket expenses.
Tax Audit Insurance availed through your Insurance Broker will typically have a higher scope of protection, and is planned to cover more in-depth audits. The audits can cost you a lot of money, and may demand professionals other than your accountants.
The business owner may prefer choices between Audit Shield Cover and/or a Tax Audit Insurance. For some, they may refer both covers for valid protection, and it may be highly advised that they must have both insurance coverages.
It doesn’t matter whether the business owner, may choose to have one or both, but it can be a considerable decision to have both protection, as anything can happen. It is just a matter of having your accountant educate his clients on the benefits of both protections.
We hope we have clarified the major differences between Audit Shield Cover and Tax Audit Insurance. With the first one, you need your accountant for protection. The latter will need you to have an insurance broker for protection. So learn to weigh the importance of both coverages and apply to your auditing systems.