There is no single Tax Audit Insurance limit suitable for every business.

The appropriate limit should reflect the potential professional costs of an audit.

What can affect audit costs? #

Factors include:

• Business turnover.
• Number of entities.
• Number of financial years reviewed.
• Volume of transactions.
• Complexity of tax arrangements.
• Types of taxes involved.
• Length of the audit.
• Professional hourly rates.
• Need for specialist legal or tax advice.

Can a relatively small business still incur significant costs? #

Yes.

The cost of responding to an audit is not determined solely by turnover.

A smaller business can still require substantial professional assistance where:

• Several years are reviewed.
• Records are complex.
• Multiple entities are involved.
• Several taxes are examined.

Is Tax Audit cover sometimes sublimited? #

Yes.

Where Tax Audit is part of Management Liability or Business Insurance, it may have a lower sublimit than the main policy limit.

For example, a Management Liability policy with a much larger overall limit does not automatically mean the same amount is available for Tax Audit expenses.

Should the lowest available limit simply be selected? #

Not automatically.

Consider whether the chosen limit would realistically fund the accounting, tax and legal assistance required for a prolonged audit.

Webber Insurance can compare the available options and existing cover.