Readers’ forum: Include an estimate for insurance in final accounts?

My client is a consulting engineer who operates through a personal service company – the IR35 rules are not an issue. The company ceased trading in 2021 and terminal loss relief is available.

The client wishes to offset the trading loss of the final 12 months against profits of the preceding 36 months.

The company’s contracts with its customers require that it will maintain adequate professional indemnity (PI) insurance cover for six years.

Unfortunately the company has been unable to obtain a quote for a single premium multiple year run-off (or ‘tail-off’) policy due to the current state of the PI market. Instead it seems that he or the company will have to continue paying annual PI premiums for the next six years.

Can my client include in the trading loss of the final 12 months an accrual for the estimated insurance cover for the six years following...