IR35 Insurance

[Keanu2020]

Nope it’s very clear how it works - HMRC have a helpline you can call and get advice on.

their advice is actually simple, do what you can to recover the money from the contractor and then repay it as deemed payments with the tax deducted because otherwise you need to pay tax on the full amount the contractor received.

so a £500 a day contract for 200 days is £100,000. recover the money from the contractor and £45,000 goes to HMRC and you return the £55,000 as a deemed payment to the worker.

fail to recover the money and that £100,000 is deemed to be the deemed payment net of tax and the chain will need to find the £95,000 or so that HMRC believes is owed in tax.

now the chapter 10 law is a mess because it results in 2 possible outcomes but it should be very clear why 1 particular approach is the one everyone (except the contractor) in the chain prefers.

and it’s why all the sane large clients operate on the basis of that they will only use umbrella workers - wtf would you take the risk unless you had an exception that pushed the decision into the chapter 8 rules.

edit to add - and I think if you follow the logic above you can see why kingsbridge are getting the contractor to pay the insurance..

I assume the contractor has to agree to this though (paying the money back, and then taking a lower deemed payment)?

I get your point about how how large clients operate, and if I was in that position I might do the same (why take a risk), hence all roles now inside.

[jamesbrown]

Bit slow here and just checking, but main way your not engaging under ch.10 is either contracting to small business clients (under the £10.2M) or overseas work right?

Correct. I do the latter.

[jamesbrown]

I assume the contractor has to agree to this

It's true that there's a more legally clearcut route to recovery if the contractual terms allow for it (hence supply chains will often attempt to include clawback clauses for Ch. 10 work). But even if they don't, it may be recoverable in the same way a PAYE error is recoverable from an employee (TBD). Regardless, it's likely that the Fee Payer would start by withholding money owed, wherever possible, so shorter payment terms are preferred.

[Protagoras]

Bit slow here and just checking, but main way your not engaging under ch.10 is either contracting to small business clients (under the £10.2M) or overseas work right?

Correct. There is a third way that suits some which is to engage as a worker using an Umbrella company.

[Costa]

Hi All,

May be not directly relevant to the original question in this thread, but had a quick query about IR35 Insurance, so thought will ask here.

We have taken IR35 Insurance from Qdos. It is on the company name, and we pay through Limited Company business bank account. Is that cost an allowable Limited Company expense or not? Are there any relevant links / articles from any tax experts that I can read to confirm this?

(Background is that we thought it will be an allowable Limited Company expense, but our accountant doesn't agree. So trying to find out what other accountants / tax experts say.)

Thanks in advance.

[malvolio]

Hi All,

May be not directly relevant to the original question in this thread, but had a quick query about IR35 Insurance, so thought will ask here.

We have taken IR35 Insurance from Qdos. It is on the company name, and we pay through Limited Company business bank account. Is that cost an allowable Limited Company expense or not? Are there any relevant links / articles from any tax experts that I can read to confirm this?

(Background is that we thought it will be an allowable Limited Company expense, but our accountant doesn't agree. So trying to find out what other accountants / tax experts say.)

Thanks in advance.

Answered in your other thread, but basically your accountant is wrong...

[Lance]

Answered in your other thread, but basically your accountant is wrong...

yep. He's wrong.

There is an argument that insurances provided by professional membership groups like IPSE are not valid as business expenses (although my accountant had no issues when i was a member). But QDOS is a different beast so it's fine.