Brad is on the roll of solicitors of England & Wales but does not hold a practising certificate and does not provide legal advice.
Updated June 2026 · England & Wales
Going up against HMRC is rarely a straightforward experience. Whether you are a sole trader challenging a penalty, a company director pushing back on a tax assessment, or someone caught up in a wider investigation, the costs of defending your position can stack up quickly.
That is where After the Event insurance, usually shortened to ATE, becomes relevant. It is a form of legal expenses cover taken out once a dispute has already arisen, and it is designed to protect you from some of the financial fallout if things do not go your way.
This guide walks through how ATE works in a tax context, where it tends to help most, and the practical points worth thinking about before you commit to a policy.
Overview
ATE insurance is a policy you buy after a legal issue has already surfaced, hence the name 'After the Event'. In the context of tax, the event is usually an HMRC enquiry, assessment, penalty, or refusal that you want to challenge or defend.
The cover is meant to protect against some of the costs that come with contesting the matter, which can include tribunal fees, barristers' fees, solicitors' fees, expert reports, and other disbursements that pile up during a dispute. Policies vary widely.
Some only pay out if you lose, covering the other side's costs and your own disbursements. Others offer broader protection. Premiums are usually deferred and may only become payable if the case succeeds, although this depends entirely on the insurer and the wording.
ATE is not a substitute for being in the right on the tax position itself, but it can take some of the financial pressure out of pursuing a legitimate challenge. It is worth reading the policy wording carefully, because exclusions, caps, and conditions differ significantly between providers.
Key steps
Work out what the dispute actually is. Before looking at insurance, be clear on what HMRC is saying and what you disagree with. Is it an enquiry, a formal assessment, a penalty notice, or a refused claim? The nature of the dispute shapes which insurers will consider it and what the policy needs to cover.
Get a view on the merits. ATE insurers will almost always want a professional opinion that your case has reasonable prospects of success. That usually means instructing a tax specialist or barrister to assess the position. Without a supportive merits view, cover is unlikely to be offered at all.
Compare policies and wordings carefully. Not all ATE products are the same. Look at what counts as a 'win', whether own-side disbursements are included, what the cover limit is, and when the premium becomes payable. Two policies with similar headline figures can behave very differently in practice.
Take the policy out at the right stage. Cover is usually easier and cheaper to arrange early in the dispute, before costs have already been run up. Some insurers will not cover costs incurred before the policy starts, so timing matters more than people often realise.
Keep the insurer informed as the case moves. ATE policies typically include conditions about notifying the insurer of settlement offers, changes in prospects, and key procedural steps. Falling foul of these notification duties can put cover at risk, so treat them as ongoing obligations rather than one-off admin.
Q Who typically uses ATE insurance in tax disputes?
It is used by individuals and businesses facing HMRC who want to protect themselves against the cost risk of a tribunal or court challenge. Common users include company directors contesting assessments, taxpayers appealing penalties, and people caught up in enquiries into avoidance schemes. It tends to appeal most where the amount at stake justifies the premium and where the dispute cannot easily be resolved through HMRC's internal review process.
Q Does ATE insurance cover HMRC's costs if I lose?
In tax tribunal cases, costs awards between parties are the exception rather than the rule, particularly in the First-tier Tribunal standard category. Where costs can be awarded, such as in complex cases or the Upper Tribunal, an ATE policy may cover the other side's costs subject to the policy limit. The scope depends entirely on the wording, so check how adverse costs are defined.
Q When is the premium paid?
Many ATE policies defer the premium until the end of the case, and some only require payment if you win. Others charge the premium upfront or in stages. The structure affects the overall cost and the risk you are carrying, so it is worth asking the broker or insurer to spell out exactly when money is due in different outcomes.
Q Can I get ATE cover if my case has already started?
Often yes, although the terms may be less favourable and some costs already incurred may not be covered. Insurers generally prefer to be approached early, and premiums can rise as the dispute progresses. If you are mid-way through a tribunal process, cover is still worth exploring, but expect more scrutiny of the merits before a policy is offered.
Q Is ATE insurance the same as legal expenses insurance on my home policy?
No. Before the Event legal expenses cover, often bundled with home or business insurance, is taken out before any dispute arises and usually has tight limits and exclusions for tax work. ATE is arranged specifically for a known dispute. If you have existing BTE cover, check it first, because you may already have some protection before paying for a separate ATE policy.
Q Will having ATE insurance affect how HMRC deals with my case?
HMRC assesses tax disputes on the law and facts, not on whether you have insurance. That said, being properly funded to take a case to tribunal can change the dynamics of settlement discussions, because HMRC knows you are in a position to see the matter through rather than having to back down on cost grounds alone.
Q Does ATE guarantee I will win my tax dispute?
No. ATE is a cost protection product, not a predictor of outcome. The insurer's willingness to offer cover suggests an independent view that the case has reasonable prospects, but tribunals reach their own conclusions. You should still expect to make your case on its merits, with insurance reducing the financial downside rather than removing the risk of losing.
Thinking about taking on HMRC and unsure where to start?
Tax disputes often turn on small details about timing, process, and what HMRC is actually asserting, and it helps to talk the situation through before making decisions about insurance or next steps. An experienced legal adviser can give you practical perspective tailored to what you describe on the call.
✓Plain-English answers to your specific questions about the dispute
✓Practical perspective on your options based on what you describe
✓Help thinking through whether ATE cover is worth exploring in your situation
✓Clarity on what to watch out for as the matter progresses
Personal call · For information only · Independent advisers
Written & reviewed by
Brad Askew Solicitor (non-practising)
Brad is on the roll of solicitors of England & Wales but does not hold a practising certificate and does not provide legal advice. LegalDocuments.co.uk is not a law firm and does not provide regulated legal advice.
This article is for general information only. It is a tool to help you find your way — not legal advice, and not a substitute for speaking to a qualified adviser about your situation.
