We have had a couple of queries recently about HMRC, tax clearance, and as a result of the recent article in Recovery magazine, insurance. The fact that the article was written by someone who works for an insurance broker should tell you a lot. Our view is that this is just a marketing piece, trying to create new demand for an existing product in a sector that has not traditionally used it.
If you have taken sensible steps to confirm that there are no outstanding tax matters, then you should be happy to close the case. Clearance was never worth much on top of that and if you are happy that the directors, members, and accountants have been honest with you, you have checked with the company’s records, and everything seems to be above board, you should have no worries. Even if HMRC subsequently found something, they would restore the company and go after the members, as long as there was no suggestion that you were reckless or negligent. If you were reckless or negligent, I am not sure that tax insurance would cover you in any event.
There will always be exceptions, and you may want to keep details available if the product is still available in the right circumstances. However, by then the furore around clearance may have died down and they may have pulled the product due to lack of interest. I cannot see any way that you could justify using it regularly across your MVL cases, but the cynic in me thinks that it might be useful in the right sort of case. I can imagine a case where you are receiving all the right assurances, but you feel that something isn’t right. You could suggest getting insurance then and see what their reaction is. If they argue against it and show that they have made full disclosure and it isn’t needed, your hunch was probably wrong. If they agree to pay it, they may well be hiding something and you’d be better to walk away, as the insurance probably won’t help much if they are hiding something deliberately.
Because this is a developing area, it is always worth seeking out alternative views, so I have just signed up to Malcolm Niekirk’s coffee break webinar on Monday, 4 March. If you are interested, Malcolm can be contacted through Frettons. I’ve not put a link in this article, as it can generate a bit of spam, but if you google Malcolm or Frettons, you’ll be able to get a link to register.
