Any point to IR35 Insurance if deemed Outside by end-client

[NomDePlum]

Someone made this point on another thread but it sort of got lost in the various points being made and thought it was worth asking separately:

If you are a member of IPSE and have a valid contract review is there any point to having IR35 insurance for a Public Sector contract if the end-client deems the contract as being outside IR35 given the liability rests with the agency?

My thinking is that the IPSE membership covers representation and as there is no liability there isn't anything else? Am I wrong?

[LondonManc]

The potential value is where it moves inside.

[NomDePlum]

The potential value is where it moves inside.

Is that not the point were you leave ASAP? Obviously this relies on a short/immediate termination clause being present. Might even be worth considering having a clause that terminates the contract on change of status from the end-client! Not heard of anyone doing that but doesn't sound unreasonable.

[malvolio]

If you're an IPSE member you get it anyway, as I'm sure you know. The other benefits probably outweigh cancelling your membership.

But you can still fall foul of a tax investigation anyway, so I'd say a false economy.

[LondonManc]

Is that not the point were you leave ASAP? Obviously this relies on a short/immediate termination clause being present. Might even be worth considering having a clause that terminates the contract on change of status from the end-client! Not heard of anyone doing that but doesn't sound unreasonable.

I think we're entering a new era of contracting here - what's the cost of not having it?

[eek]

If you're an IPSE member you get it anyway, as I'm sure you know. The other benefits probably outweigh cancelling your membership.

But you can still fall foul of a tax investigation anyway, so I'd say a false economy.

I would hope IPSE as a whole have a better answer than that one lined up as I suspect its going to be a common question (not a dig but a prepared stock answer would be helpful).

One reason for IPSE membership is to cover any retrospective investigation that came your way after all previous investigations have been historic investigations rarely connected with the current client..

The other insurance policies are also probably worthwhile - recently people left IPSE between gigs and then one discovered that they really should have had the agency cover and another needed the jury service cover...

[NomDePlum]

But you can still fall foul of a tax investigation anyway, so I'd say a false economy.

Yes but the insurance I have mentioned is specific to IR35 not more general tax investigations.

[malvolio]

Yes but the insurance I have mentioned is specific to IR35 not more general tax investigations.

OK - but if you have IPSE membership why do you need it?

Of course, if it's a protection for IR35-realted penalties and back taxes such as TLC35 or Survive35 that's different. IMHO you never need that anyway, but the liability for payment of the taxes deemed as due is with the agency. That doesn't mean you can't get done for not paying IR35 taxes if they are found to be due. And if the gig is deemed outside IR35 you get paid gross by the agency and taxes are your problem.

[malvolio]

I would hope IPSE as a whole have a better answer than that one lined up as I suspect its going to be a common question (not a dig but a prepared stock answer would be helpful).

One reason for IPSE membership is to cover any retrospective investigation that came your way after all previous investigations have been historic investigations rarely connected with the current client..

The other insurance policies are also probably worthwhile - recently people left IPSE between gigs and then one discovered that they really should have had the agency cover and another needed the jury service cover...

True - a more expansive answer has just been provided. If a PS gig is outside the agency pays YourCo gross, so it's business as usual wrt IR35.

[NomDePlum]

OK - but if you have IPSE membership why do you need it?

Of course, if it's a protection for IR35-realted penalties and back taxes such as TLC35 or Survive35 that's different. IMHO you never need that anyway, but the liability for payment of the taxes deemed as due is with the agency. That doesn't mean you can't get done for not paying IR35 taxes if they are found to be due. And if the gig is deemed outside IR35 you get paid gross by the agency and taxes are your problem.

It was TLC35 I was considering. I've never taken out IR35 insurance before but was looking into it as I have the possibility of taking a PS contract which the client has confirmed as being outside. My original thought was that this was a good cautious approach but as I am a member of IPSE Plus and the liability is with the agent and I can't see the point now.