More business owners are buying tax audit insurance to protect against professional fees incurred if they are investigated, according to BizCover.

This financial year, the Australian Taxation Office has warned its areas of focus include small businesses in the building and construction, cleaning and professional services industries.

Responding to an ATO compliance check can cost thousands of dollars in professional fees “even before a single issue is resolved”, BizCover CFO Ricky Prasad says.

He says the Tax Office’s warning has driven a 22% increase in businesses buying tax audit cover, on top of a 36% increase last financial year.

The policies cover accountants’ costs incurred responding to an ATO audit or investigation, and Mr Prasad says the typical monthly premium is $41.90.

The Tax Office conducts more than 2 million reviews and audits a year, targeting businesses and individuals, and Mr Prasad says they can be time-consuming and costly.