Inland Revenue Auditing and audit insurance

[jimO]

And the outcome was?
Randomly selected every year - lol

didnt hear back from them

[mrsaneperson]

My accountant sent me a bill for Audit Shield Insurance

Anyone else get one of these from their accountant?
This one is around $300 and covers accountancy work for the forwarding year should an IRD audit come up. If i dont want the cover i need to let him know by February 2015.

There are far too many exclusions reading through the policy .

I think the whole thing is quite scammy.

What does everyone else think?

[Anthonyacat]

Hi Mrsaneperson

The firm I used to work for signed up with Auditshield. I don't think it's ok that your accountant sent a bill and asked you to opt out. It should certainly be an opt-in procedure.

From the advertising material and Q&A we had with the Auditsheild salespeople it appears to be a good product, but it won't suit everyone. The more complex your accounts are, the more work will be required by your accountant and the higher your bill will be in case of an audit. The insurance cost is based on your turnover I think, so smaller but very complex businesses will get better value than large simple ones.

It also covers for non-audit activities, such as IRD review engagements, etc. With the back-and-forth nature of IRD communications, your accountant could spend several hours crafting letters and the final result could be either a full audit, or the IRD taking no further action. But those hours spent on letters will cost you more than $300 at all but the cheapest accountant's chargeout rates.

I haven't looked in too much depth on the exclusions, what specifically are you concerned about?

As a side note, check the policy, as you mentioned it covers work for the forwarding year, but I think from memory it covers the past two or three years as well.

All in all, I don't think it is any more scammy than any other insurance.

[artemis]

Has been discussed here before ....

http://www.propertytalk.com/forum/showthread.php?35621-Inland-Revenue-Auditing-and-audit-insurance

[Rosco]

Look at the previous thread as some good info.

My thoughts are that Audit Insurance isn't that worthwhile for long term hold property investors. Very small number of audits a year from IRD and often not many issues to deal with.

Also accountants get a kick back on this product, so I think it is very wrong to just bill out and ask for opt outs.

For businesses or property traders it could be worth while

Lastly some exclusions around doing things wrong, so when you really neeed help and costs a lot, it might not be covered!

Ross

[Bluekiwi]

I dithered over this for a while.
My accountant said it was good value and I had been told by someone this kind of insurance is worthwhile.

I think for an investor with 1 to 4 rentals probably not worth it.
But for someone with more than that, and doing more complicated stuff, probably a good idea.

Its $300 a year, and covers up to 10k of cost of your accountant.
I did it in the end as I thought it would just reduce the hassle for me if I got audited.

But then again I have car insurance for 3 car's, life insurance, rental insurance for rentals, life insurance and disab insurance etc.
Its actually quite horrendous I am too scared to to add up the annual cost.

Then when you do claim for anything the insurance company either reneges on paying out unless you battle them, and then make you pay latter for claiming.
I think they are playing catch up on all the Chch earthquake loss's.

I sometime wonder if I should just cancel all insurances and use the money to pay off my house.