IR35 Exposure Calculator

[malvolio]

[QUOTE=meeko;2404465]I've had my contracts and working practices reviewed, and the overall view was 'outside IR35' but this doesn't guarantee an 'outside' verdict from an enquiry. I've taken out insurance but I want to be sure the level of cover is sufficient for my liability hence trying to understand my exact liability.
QUOTE]

Hang on a mo...

Your liability is easy: when you lose a case you will know it, but until then you won't since it is a function of the gross income for that contract which obviously goes up over time. Worse case is the total value of the contract x 95% x (very roughly) 45%.

IPSE and similar cover is for the investigation. The "Pay the taxes" cover from various suppliers is insuring themselves against being wrong when they say you are outside IR35. There is probably a pool of money to cover this risk, but they do not insure you for a set amount. So I really don't quite see the problem...?

[SeededLoaf]

On the very morning of receiving a brown letter from HMRC, transfer all retained income into pension.

That's if you haven't used your last 3 years allowance.

[meeko]

[QUOTE=malvolio;2404486]

I've had my contracts and working practices reviewed, and the overall view was 'outside IR35' but this doesn't guarantee an 'outside' verdict from an enquiry. I've taken out insurance but I want to be sure the level of cover is sufficient for my liability hence trying to understand my exact liability.
QUOTE]

Hang on a mo...

Your liability is easy: when you lose a case you will know it, but until then you won't since it is a function of the gross income for that contract which obviously goes up over time. Worse case is the total value of the contract x 95% x (very roughly) 45%.

IPSE and similar cover is for the investigation. The "Pay the taxes" cover from various suppliers is insuring themselves against being wrong when they say you are outside IR35. There is probably a pool of money to cover this risk, but they do not insure you for a set amount. So I really don't quite see the problem...?

The problem is the "pay the taxes" cover gets more expensive as the amount covered increases. I want to ensure I have the correct level.

I'm just confused about the 45% - as I mentioned before, the HMRC examples do not include salary+benefits in kind already taxable as employment income in the deemed payment. Using this calculation I see a libility of around 36%, not the 43% of total turnover using your formula.

[malvolio]

[QUOTE=meeko;2404640]

The problem is the "pay the taxes" cover gets more expensive as the amount covered increases. I want to ensure I have the correct level.

I'm just confused about the 45% - as I mentioned before, the HMRC examples do not include salary+benefits in kind already taxable as employment income in the deemed payment. Using this calculation I see a libility of around 36%, not the 43% of total turnover using your formula.

You don't get BIKs inside IR35, but hey...

OK, do your own sums. I was only trying to identify very roughly what your exposure was, but as has been said already it can only ever be an estimate. And I'm not aware that things like TLC35 and Survive35 - pointless as they are in reality - change their charges the longer the contract goes on or their cost is linked to a single contract value. Perhaps you're looking at the wrong providers, or one of us is totally missing the point.

[meeko]

I've referred the calculation back to QDOS to see if they come up with similar numbers.

The TLC35 product can be purchased with either £50k, £75k or £100k of cover. The charges are fixed, and that is total cover for all contracts that pass their acceptance criteria and is retroactive. Thanks for all of your help, it's much appreciated.