Abbey WILL (possibly) cover for retrospective PS IR35 claims

[pr1]

Doesn't sound right to me at all. I am not quite understanding why the Abbey et al are not changing their position slightly to make sure they are protected to some extent. Just looking at the number of institutionalized contractors that don't understand all this and just plodding on in to a massive car crash I can't see how the insurers are happy to take them under their wings for a couple of hundred quid.

The same as any insurer calculates their prices - risk vs cost

I'd say roughly speaking:
A: chance of investigation 1/1000 (taken from an AbbeyTax doc)
B: chance of losing investigation assuming you have a decent contract they've approved, say 1/10 (not sure of exact stats but this is probably conservative)

overall chance of IR35 claim being "successful by HMRC" 1/10000 (A*B)
cost of tax/interest from losing IR35 investigation: (say) £50,000 (C)

averaged cost per punter = C/(A*B) = £5

price charged: £200

profit £195 per punter

As long as you can convince enough people that IR35 is enough of a threat that spending "less than a day rate!!!" on "insurance" for it, then you've got a pretty good business model

[malvolio]

The same as any insurer calculates their prices - risk vs cost

I'd say roughly speaking:
A: chance of investigation 1/1000 (taken from an AbbeyTax doc)
B: chance of losing investigation assuming you have a decent contract they've approved, say 1/10 (not sure of exact stats but this is probably conservative)

overall chance of IR35 claim being "successful by HMRC" 1/10000 (A*B)
cost of tax/interest from losing IR35 investigation: (say) £50,000 (C)

averaged cost per punter = C/(A*B) = £5

price charged: £200

profit £195 per punter

As long as you can convince enough people that IR35 is enough of a threat that spending "less than a day rate!!!" on "insurance" for it, then you've got a pretty good business model

Hmm.. Wrong on every point, but hey.

Read my previous post. You're not insuring against being inside IR35. You're also not insuring the cost of the taxes to be paid. And IR35 is hardly a "risk", come April. more of a certainty if you don't do something now.

[northernladuk]

And you are probably right. I just get nervous with insurance. The reputation they have of trying to get out of paying, complex T&Cs, constantly rising premiums and so on. It just doesn't feel right. In many other areas of insurance a change to the landscape would result in increased premiums and so on. I could be tarring them with the wrong brush I guess.

[jamesbrown]

AFAIK Abbey will only give you insurance under Survive35 if they are happy that the contract is outside IR35, which is not unreasonable. In effect they are insuring themselves against getting it wrong and having to pay the tax for you. You are not being insured against having to pay taxes due under a valid IR35-caught contract.

So the only defence I can see if you have to take or extend a PS contract is to get it marked as being outside IR35 - and that means (a) you and your client have to understand the legislation properly and (b) you have to be taken on with a proper contract, a clear SoA and not through CLOne.

Correct, and Abbey Tax do a thorough review that includes a bunch of questions about WP, as well as the contract. Not all reviews are equal. This is why I asked whether PC was ready for a second opinion; he might not like the answer or the consequences.

[pr1]

Hmm.. Wrong on every point, but hey.

Read my previous post. You're not insuring against being inside IR35. You're also not insuring the cost of the taxes to be paid

SurviveIR35 and Qdos TLC35 do

[northernladuk]

Correct, and Abbey Tax do a thorough review that includes a bunch of questions about WP, as well as the contract. Not all reviews are equal. This is why I asked whether PC was ready for a second opinion; he might not like the answer or the consequences.

Indeed. I'll bet the answers he give don't reflect some of the comments he's made on here previously.

[malvolio]

SurviveIR35 and Qdos TLC35 do

No, they don't.

OK, that may be the end result if you have a safe IR35 contract that they have agreed to be safe and then lose the tribunal/appeals/High Court cases and are found to be liable for the resultant unpaid taxes. But nothing else.

HTH. BIDI.

[pr1]

No, they don't.

OK, that may be the end result if you have a safe IR35 contract that they have agreed to be safe and then lose the tribunal/appeals/High Court cases and are found to be liable for the resultant unpaid taxes. But nothing else.

HTH. BIDI.

From https://www.qdoscontractor.com/insur...iability-cover

TLC35 is a comprehensive insurance policy designed with the threat of IR35 in mind. This policy will protect you in the event of HMRC opening an enquiry into your accounts, whether it is a PAYE compliance review, VAT dispute, IR35 enquiry or any other HMRC enquiry, Qdos will be there from day one to defend you.

In addition to this invaluable support, the policy will also cover any tax/NIC liabilities, interest and penalties should you be found ‘caught’ by the IR35 legislation up to the indemnity on your policy schedule.

------
From https://www.abbeytax.co.uk/abbey-plus/ir35-services

If a contract is deemed ‘outside of’ or ‘not caught by’ IR35, Abbey Tax can also offer tax losses insurance to your contractor (personal service company) clients, which will pay any tax, interest and even penalties, if HMRC is successful in arguing that IR35 applies.

[jamesbrown]

From

You're not following what Mal is saying. It's a subtle point about what they're protecting themselves against, i.e. being wrong, and not you avoiding tax that is due.

[northernladuk]

I'd like to see Abbey take the term 'can' out and put 'will' in... maybe I need to take my tinfoil hat off I think.

So... Here is a hypothetical situation. If PC gives his info to Abbey, they say outside but are unaware he's doing adhoc work proving D&C/part and parce, and it goes to court. PC loses because he is under D&C. Will Abbey throw the claim out or will they pay up because their assessment wasn't complete enough or PC's answers not a true reflection? They can only take a client on his/her word and not the true WP?

Or is this too hypothetical because Abbey knows it never goes this far so isn't concerned about it?

EDIT : Oh.. I think JB's comment might have cleared that up...