This FAQ is for principals, partners and finance leads at UK accountancy practices regulated by ICAEW, ACCA, AAT, CIOT, ICAS or HMRC. It covers the questions we are most often asked about Accountants PI: regulator minimum requirements, audit and tax-related exposure, fee disputes, ATED/CIS errors, the practical line between PI and tax investigation cover, and how to manage cover at structural change. The answers reflect the position under the relevant professional bodies’ rulebooks and UK law as at May 2026.
The accountancy PI market is competitive — there are perhaps a dozen specialist insurers with meaningful appetite — but the wording and the limit chosen still matter at claim. ICAEW’s 2024 revisions to the PII Regulations, the post-Brexit changes to audit oversight, and HMRC’s evolving enforcement priorities all shape the cover decisions practices face. For tailored guidance contact Apex Insurance Brokers on 0117 325 0027 or info@apexinsurancebrokers.co.uk. For the general PI position see our main PI FAQ hub.
What does ICAEW require for PI?
Under the ICAEW Professional Indemnity Insurance Regulations as revised with effect from 1 September 2024, member firms must hold qualifying insurance with a Participating Insurer that has signed ICAEW’s Participating Insurer Agreement. The minimum limit of indemnity is £2 million for any one claim and in the aggregate for firms with gross fee income above £800,000. For firms below £800,000 fee income, the minimum is two and a half times gross fee income subject to an absolute floor of £250,000. Firms with gross fee income above £50m are not required to hold qualifying insurance but must demonstrate “appropriate arrangements”. The maximum permitted aggregate excess is the higher of £3,000 or 3% of gross fee income.
What does ACCA require for PI?
ACCA members in practice are bound by the ACCA Rulebook PI requirements. Firms with total income below £600,000 must hold the greater of 2.5 times total income or £100,000; firms with total income of £600,000 or more must hold at least £1.5 million. ACCA also requires six years of run-off cover following cessation, and (for firms with principals or staff) fidelity guarantee insurance to protect client money. A practice holding both ICAEW and ACCA registration must meet whichever regulator’s bar is higher on each individual metric — the requirements do not net off.
What does AAT require for PI?
AAT licensed members in practice need PI cover on an “any one claim” basis. The AAT minimum is the greater of 2.5 times gross fee income or a structure-dependent floor — £50,000 for sole traders, £100,000 for partnerships and limited companies — with a maximum required limit of £1 million once gross fee income exceeds £400,000. AAT’s monitoring will check evidence at licence renewal and on request. The minimums are lower than ICAEW and ACCA, reflecting the typically smaller scale of AAT licensed practices, but the same general principles about adequacy of cover apply.
How much PI should I actually buy above the minimum?
The minimum is rarely the right answer. The right limit depends on the largest individual exposure a single client could suffer from an error on your work. A practice that signs off accounts used in a £5m business sale, or files a tax return for a client with £20m of capital gains, has individual exposures far above any regulator floor. A practical test: think about your three largest live engagements; your limit should comfortably exceed the worst-case financial exposure on the most exposed one, with headroom for defence costs. Owner-managed-business practices typically buy £500,000 to £1m; firms with corporate finance or insolvency capability typically buy £2m upwards; audit firms substantially more.
Are tax planning claims covered by PI?
Generally yes, where the claim is for the consequential loss caused by negligent tax advice — for example, additional tax, interest, penalties and professional fees the client incurs because of your error. The tax itself the client should have paid anyway is usually not recoverable from a PI policy because the client would have paid it regardless. The line is sometimes contested. Aggressive tax avoidance scheme work has historically been a source of contested coverage; many PI policies now exclude or sub-limit claims arising from disclosable tax avoidance schemes. Practices doing tax planning should specifically check the wording.
Does PI cover audit claims?
Yes, but audit work is one of the highest-risk and most carefully underwritten activities in the accountancy PI market. Statutory audit claims have been a major loss source for insurers — failed audits of insolvent or near-insolvent entities can generate claims in the tens of millions. PI cover for audit work is available but premium rates per pound of audit fee are significantly higher than for accounts preparation. Insurers ask supplementary questions about audit clients’ sectors, sizes and any “special interest” entities (pension schemes, FCA-regulated, listed). Smaller audit firms have seen capacity tighten materially in recent years.
Does PI cover tax return errors?
Yes — a tax return prepared negligently that results in the client paying additional tax, interest or penalties can be a PI claim for the additional non-tax cost. The defining feature is whether the client suffered loss beyond the tax they would always have owed. For example, a missed loss claim that becomes irrecoverable due to a time limit is a real loss to the client; an arithmetic error caught by HMRC before submission is usually not. The wording of the insuring clause and the burden of proof matter — clear file notes and contemporaneous evidence of advice help when defending.
Is HMRC tax investigation cover the same as PI?
No — they are different products. Tax Investigation cover (also called Fee Protection insurance) pays the professional fees the client incurs when HMRC opens an enquiry into their tax affairs, regardless of whether the practice was at fault. PI covers claims against the practice for negligent professional services. The two complement each other: a HMRC enquiry that uncovers an error caused by the practice’s negligence might be funded under Tax Investigation cover at the client level, then trigger a PI claim against the practice for the client’s additional loss. Many practices offer Tax Investigation as a client product and hold PI for their own protection.
Are payroll and CIS errors covered?
Yes, payroll services and Construction Industry Scheme administration are normally within the “professional services” definition of an accountancy PI policy. Claims typically arise from missed PAYE deadlines, incorrect tax codes applied, missed RTI submissions, CIS verification failures, and miscalculation of pension auto-enrolment contributions. The consequential client loss can be significant where penalties and interest mount up. High-volume payroll bureaus face specific underwriting attention; the controls in place — software, second-checks, deadline tracking — matter for both pricing and coverage.
What about ATED, SDLT and other client-specific filings?
Annual Tax on Enveloped Dwellings (ATED), Stamp Duty Land Tax (SDLT), Capital Gains Tax 60-day returns, P11Ds, P60s, VAT returns and similar filings are all within scope of standard accountancy PI. The risk profile varies sharply: SDLT errors on multiple-property purchases or commercial transactions can generate six-figure claims, while a missed VAT return is usually a smaller exposure. Practices doing significant SDLT advisory work (particularly multiple dwellings relief, mixed-use claims) should mention this at proposal — some insurers price it specifically.
Are fee dispute claims covered?
Generally no. Most PI policies include a “fees exclusion” that excludes claims by clients seeking reduction or refund of the practice’s own fees. The exclusion exists because fee disputes are commercial disagreements, not professional negligence. The line can blur — a client may frame a fee complaint as a negligence claim (“the work wasn’t worth what you charged because it was wrong”). In such cases the insurer’s response depends on whether the claim, in substance, alleges negligence resulting in loss or merely disputes the fee. Strong engagement letters and clear scope definition are the first line of defence.
How does PI interact with the Money Laundering Regulations?
PI responds to civil claims arising from professional services, including claims where inadequate AML procedures caused a client or third party loss. It does not respond to AML regulatory fines from HMRC, the FCA, the SRA or the supervisory body — those are excluded as a matter of insurance law. Defence costs of an AML supervisory investigation are sometimes covered under a regulatory defence sub-limit. The main exposure for accountancy practices is the regulator’s penalty, which is uninsurable; the second exposure is the consequential cost of remediating documentation gaps and reputation damage.
What does “qualifying insurance” mean for ICAEW firms?
Under the ICAEW PII Regulations, qualifying insurance is PI cover provided by an insurer that has signed ICAEW’s Participating Insurer Agreement and that meets the minimum prescribed wording. Buying from a non-participating insurer — even at lower premium or with broader cover — does not satisfy the regulatory requirement and may put ICAEW practising certificate authorisation at risk. The current list of Participating Insurers is published on the ICAEW website and changes periodically; the broker should confirm participating status before binding cover.
What is the minimum run-off period for accountants?
ACCA requires six years of run-off cover for ceased practices. ICAEW requires two years of run-off cover under its participating insurer regime, which is shorter than ACCA — practices that hold both registrations must meet the longer ACCA period. AAT requires a “reasonable period” but does not fix a minimum number of years; six years matches the basic contractual limitation period and is widely viewed as a sensible floor. Practices with significant audit, tax planning or trust work often extend voluntarily to ten or twelve years to match longer limitation tails.
Does PI cover claims from non-client third parties?
It depends on the wording. Standard insuring clauses respond to claims by anyone alleging the practice’s negligent professional services caused them financial loss — not just clients. The classic third-party claim is from a lender or buyer who relied on financial statements or a due diligence report prepared for the client. The Caparo v Dickman line of authorities sets boundaries on third-party duty of care, but where duty exists, PI normally responds. Practices producing reports knowing third parties will rely on them should consider explicit assignee / reliance language and confirm wording response.
What is the position on insolvency work?
Insolvency Practitioner work is regulated separately by recognised professional bodies under the Insolvency Act 1986 and Insolvency Rules 2016. IPs must hold PI as a condition of their licence — the relevant body sets requirements that broadly mirror the accountancy regulator’s. Insolvency claims tend to come from creditors, directors of the insolvent entity, or HMRC, and quantum can be material. IP cover is often quoted as a separate section within the practice’s PI or as a standalone policy; mixed accountancy/IP firms should ensure both sets of regulator requirements are met.
Does PI cover company secretarial work?
Yes, company secretarial services — filings at Companies House, maintenance of statutory registers, advice on directors’ duties, share allotments and transfers — are within the standard “professional services” definition. Claims typically arise from missed filing deadlines (resulting in strike-off or fines), errors on share registers (resulting in disputes over ownership) and procedural failures in corporate restructurings. The exposure is usually smaller than tax or audit but not trivial; a botched share transfer in a £5m company sale can be a six-figure claim.
How are claims from former clients treated?
Claims-made PI responds to claims made during the policy period, regardless of when the work was done. A claim from a client whose engagement ended five years ago is still a claim notifiable to the current insurer (subject to the retroactive date and any specific exclusions). The practical issue with former-client claims is file retention: defending a claim about work done years ago is much harder without contemporaneous files. The Limitation Act 1980 sets six years for contract / negligence; longer for latent damage. Practices typically retain files for six to ten years for this reason.
Does PI cover work done before joining the practice?
When a principal joins an existing practice, work done before they joined is normally covered by the firm’s PI in the same way as the rest of the practice’s history, provided the firm’s policy is fully retroactive (i.e., the retroactive date is not later than the original work). Work the principal did at a previous firm is covered by that previous firm’s PI (or its run-off). When a principal brings a book of clients across with them, the position is more complex — the old firm may or may not retain liability, and a “successor practice” or transfer agreement is usually needed. Broker advice is essential.
What is “fidelity guarantee” cover and is it required?
Fidelity Guarantee (also called Crime cover) protects the practice against losses caused by dishonesty of its own employees — theft of cash, fraudulent payments, embezzlement of client money. ACCA mandates fidelity guarantee for firms with principals or staff. ICAEW does not require it but it is widely held. The cover is usually a small policy or section within the PI — limits of £100,000 to £500,000 are typical for small practices. Social engineering fraud (fake invoice, CEO email scams) is increasingly an issue and may need a specific extension or standalone cover.
How do claims from “going concern” or insolvency advice get treated?
Advice that a business is a going concern when it was not, or failure to advise of insolvency risk, is a well-trodden source of accountancy claims — particularly when the business subsequently fails and creditors look for recovery. The PI policy responds where the work was negligent and caused loss; the difficulty is causation and the counterfactual (what would the client / creditor have done with correct advice?). Insurers ask supplementary questions about going-concern review procedures, file notes and risk-based engagement letter drafting for practices with material risk of such claims.
What questions do PI underwriters ask accountancy firms at proposal?
Expect: corporate structure and principals; total fee income and split by service line (audit, accounts prep, tax compliance, tax advisory, payroll, company secretarial, insolvency, corporate finance, due diligence, forensic); largest single client and concentration risk; client sectors (especially regulated, listed or international); claims and circumstances in the last five to six years; regulatory standing (ICAEW/ACCA/AAT/FRC); any disclosable tax avoidance scheme involvement; AML supervision and procedures; IT and cyber controls; staff numbers and supervision arrangements. Audit firms face additional questions about audit clients and partner experience.
Should I notify a circumstance even if no claim has been made?
Yes, where the circumstances reasonably could give rise to a claim. The classic accountancy circumstances are: client expresses dissatisfaction about a piece of work; a tax error spotted internally before HMRC raises it; an audit engagement where a material misstatement is discovered after sign-off; a former client’s solicitor asks questions about old work; a regulatory letter. Notification preserves cover under the current policy. Practices sometimes hesitate to notify for fear of renewal impact, but the alternative — losing cover entirely if the claim arrives after a switch — is far worse.
Does PI cover advice on cryptoassets?
The PI market’s position on cryptoasset work has been cautious. Tax and accounting advice on cryptoassets is generally within scope of professional services and would normally be covered, subject to standard exclusions. Specific carve-outs sometimes apply for advice characterised as financial promotion (which would need separate FCA permissions) or for advice given to clients in unregulated investment schemes. Practices doing significant cryptoasset work should mention it at proposal and confirm specific coverage.
What happens to PI on practice merger or sale?
The acquiring firm’s PI normally needs to be amended to add the acquired entity and (typically) to extend retroactively to cover the acquired firm’s historic work. Whether the selling principals also need to buy run-off depends on the structure of the deal and the wording of both policies. The default — without explicit arrangement — is often that the selling principals are personally exposed to claims arising from pre-completion work that surface after the acquirer’s policy ends. The PI position should be a defined item in any sale or merger negotiation, not an afterthought.
What should I do if a client threatens to sue me?
Three steps in order: stop responding to the client without taking advice; the same week, send the threat in writing to your broker (or insurer’s claims team) with a brief factual summary; secure the underlying file. The temptation to “fix it” with the client — writing off fees, doing additional work without charge, settling for a small sum — is the most expensive mistake practices make. Most PI policies require notification before settlement steps are taken; informal settlements before notification can be excluded from cover. Even apparently small threats can develop, and early notification preserves all options.
About Apex Insurance Brokers
Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority, FCA firm reference 724952. Registered in England and Wales, Companies House 07014570. Trading address: c/o QCS, 53 Queen Charlotte Street, Bristol BS1 4HQ. Registered office: c/o Westcan, 5 Anglo Office Park, Bristol BS15 1NT. Email info@apexinsurancebrokers.co.uk, telephone 0117 325 0027. Last reviewed: May 2026.