PCG and QDOS IR35 coverage

[MyUserName]

According to the Conditions of Cover for TLC35:



Does that mean that, even if you accurately confirm the TLC35 statements that you are asked to confirm on purchase of the policy (in your own opinion, as some of the questions are subjective), that they won't cover either investigation or tax/interest/etc. if, in their opinion, they won't win, i.e. there'll be no payout anyway?

Will PCG Plus (I have this) provide cover until conclusion, i.e. until you win or lose?

In my opinion, I can confirm all of the TLC35 statements, but it seems to me that the Ts & Cs in the policy wording means that if there's a chance they'll have to pay out, they won't cover you.

Any opinions? Many thanks.

Fecking Nora - that is a good point. I missed that when I bought the policy.

QDOS rep ... could you clarify, or is this worth starting a new thread over?

[Qdos Contractor]

1. What's the point in having even having representation insurance if said insurer can decide to leave you high and dry if it suits them? Its like having car insurance, having an accident and then insurer saying, nah, too expensive.

2. If they can choose to represent you or not, surely this means they will avoid cases they might lose? I.e. Will never ever have to payout anyway!!!!

We just ask you to confirm that, to the best of your knowledge, the statements are correct. Obviously much of IR35 is a grey area, so we are not looking for cast iron guarantees. Clearly we won't offer the insurance to someone who is almost certainly caught - i.e. if they switched from employment to contracting in the same place - so these statements serve to filter out any such cases at the outset.

I can understand why people are inherently suspicious of any insurance product, but I must stress that we're not a traditional 'insurance company'. We are tax consultants and the insurance products are built around our expertise. If we started rejecting claims on the basis of the client's application form our reputation would take a serious hammering and I'm sure the FSA would take an interest.

Also, if we have represented you throughout an IR35 enquiry (which will generally last several months or even years) and you are subsequently found to be caught, we couldn't turn around at that stage and refuse to pay out on the liabilities.

We've got several new TLC35 cases on the go at the moment, so it'll be interesting to see how they pan out. We've certainly not rejected any and if the contractors are found to be inside IR35, the policies are fully underwritten and ready to pay out.

[captainham]

Let's see what Qdos says, but I take the T&C's to mean, not unreasonably:

"If you lied yer ass off when taking out the policy, and if it's obvious even to a blind monkey that you are blatantly inside IR35, then no, we won't cover you".

As long as you're as happy as you can be that you're outside IR35, with decent contract, contract has been reviewed, and you're happy that your working practices fit too, then you should be fine.

If you know your contract and working practices are a sham and that you're inside, then Qdos will soon figure that out and so why should they cover you? You need to do the due diligence yourself first to convince yourself you're outside.

Edit: Qdos beat me to it and indeed my comments above seem to ring true.

[Qdos Contractor]

The condition from the policy wording that has been quoted isn't specific to the TLC35 policy (or IR35 enquiries).

For instance, someone could take out our Freelancer Tax Protection policy, which just covers the representation costs and has no IR35-related statements to confirm. They could in theory be a shelf stacker or something, who is operating through their own limited company. If they were subject to an IR35 enquiry and it was absolutely clear that there were no prospects of success, it may be beneficial to all parties to agree a settlement with HMRC at the outset.

And captainham is correct - if someone did purposefully and obviously lie when purchasing the policy then we would have a right to reject the claim. This has never happened though and I very much doubt it ever will.

[psychocandy]

We just ask you to confirm that, to the best of your knowledge, the statements are correct. Obviously much of IR35 is a grey area, so we are not looking for cast iron guarantees. Clearly we won't offer the insurance to someone who is almost certainly caught - i.e. if they switched from employment to contracting in the same place - so these statements serve to filter out any such cases at the outset.

I can understand why people are inherently suspicious of any insurance product, but I must stress that we're not a traditional 'insurance company'. We are tax consultants and the insurance products are built around our expertise. If we started rejecting claims on the basis of the client's application form our reputation would take a serious hammering and I'm sure the FSA would take an interest.

Also, if we have represented you throughout an IR35 enquiry (which will generally last several months or even years) and you are subsequently found to be caught, we couldn't turn around at that stage and refuse to pay out on the liabilities.

We've got several new TLC35 cases on the go at the moment, so it'll be interesting to see how they pan out. We've certainly not rejected any and if the contractors are found to be inside IR35, the policies are fully underwritten and ready to pay out.

Fair does for coming on here and answering.

BUT, confirming the statements is one thing. If someone lies here then you'd have every right to not cover them. This is fair enough.

And, I agree with you, if you've started representation, and then lost, then I don't see how you'd ever get out of paying.

I think the point is though, that the t+cs appear to give you the right to refuse. Potentially someone could come along, your legal/tax people could look at it and think - theres no way we're going to win this one and its going to cost us £100K in tax/penalties etc - and say to policy holder no thanks.

Admitedly, it might not be good for your image as you say, but it could save to £150K too.

[psychocandy]

Let's see what Qdos says, but I take the T&C's to mean, not unreasonably:

"If you lied yer ass off when taking out the policy, and if it's obvious even to a blind monkey that you are blatantly inside IR35, then no, we won't cover you".

As long as you're as happy as you can be that you're outside IR35, with decent contract, contract has been reviewed, and you're happy that your working practices fit too, then you should be fine.

If you know your contract and working practices are a sham and that you're inside, then Qdos will soon figure that out and so why should they cover you? You need to do the due diligence yourself first to convince yourself you're outside.

Edit: Qdos beat me to it and indeed my comments above seem to ring true.

But thats different though, isnt it? If you lie then you can expect nothing.

But the t+cs still seem to imply they can drop it if they think you're going to lose. Nothing to do with whether you've lied or not.

[captainham]

Fair does for coming on here and answering.

BUT, confirming the statements is one thing. If someone lies here then you'd have every right to not cover them. This is fair enough.

And, I agree with you, if you've started representation, and then lost, then I don't see how you'd ever get out of paying.

I think the point is though, that the t+cs appear to give you the right to refuse. Potentially someone could come along, your legal/tax people could look at it and think - theres no way we're going to win this one and its going to cost us £100K in tax/penalties etc - and say to policy holder no thanks.

Admitedly, it might not be good for your image as you say, but it could save to £150K too.

I don't get your point and I don't think you're reading what Qdos are saying. If they review your case and they don't think you have a hope of winning, then yes they can turn round and say "Just settle". What's the point in wasting everybody's time and money to arrive at the same conclusion months/years later?

This should only happen if you are blatantly a disguised employee. If you take the necessary steps to cover yourself and prove you're outside IR35, then you have a chance and therefore they will take the case forwards.

Seems pretty clear cut to me.

[Qdos Contractor]

I think the point is though, that the t+cs appear to give you the right to refuse. Potentially someone could come along, your legal/tax people could look at it and think - theres no way we're going to win this one and its going to cost us £100K in tax/penalties etc - and say to policy holder no thanks.

I can certainly understand the concern, but in reality that situation simply wouldn't be possible. If the statements have been confirmed to the best of the contractor's knowledge, there would be no way of us knowing at the outset what the actual prospects of success were. We'd only be able to form an opinion once the enquiry had progressed significantly and, as I said, we wouldn't be able to pull out at that stage.

The only situation where we would know that the chances were slim is in cases like the shelf stacker example I gave earlier, or if it was a 'Friday to Monday' switch from employment to contracting. But those cases wouldn't be able to purchase TLC in the first place because of the statements.

[psychocandy]

I don't get your point and I don't think you're reading what Qdos are saying. If they review your case and they don't think you have a hope of winning, then yes they can turn round and say "Just settle". What's the point in wasting everybody's time and money to arrive at the same conclusion months/years later?

This should only happen if you are blatantly a disguised employee. If you take the necessary steps to cover yourself and prove you're outside IR35, then you have a chance and therefore they will take the case forwards.

Seems pretty clear cut to me.

SHOULD ONLY HAPPEN

Doesn't mean it wont if it suits them otherwise..... No offence QDOS

[psychocandy]

I can certainly understand the concern, but in reality that situation simply wouldn't be possible. If the statements have been confirmed to the best of the contractor's knowledge, there would be no way of us knowing at the outset what the actual prospects of success were. We'd only be able to form an opinion once the enquiry had progressed significantly and, as I said, we wouldn't be able to pull out at that stage.

The only situation where we would know that the chances were slim is in cases like the shelf stacker example I gave earlier, or if it was a 'Friday to Monday' switch from employment to contracting. But those cases wouldn't be able to purchase TLC in the first place because of the statements.

OK. Good point. Thanks for explaining.

OK so fair enough in this case you wouldn't cover in the first place. So why do you need the clause saying you reserve the right to not represent? Its going to scare people I think.

Surely, as seems to be the reality, you should be saying you will represent as long as the insured party has been truthful in their application. Seems fair enough to me.

Going back to car insurance. If you lie on the proposal form, then insurer is quite within their rights to not pay out which is fair enough.