IR35 Insurance

[Marco2941]

Hi all,

Hoping to get a little advice and further understanding.

For the second time I will be starting a contract which has been deemed outside ir35. I have picked up the contract through an agency who have now said I need to get ir35 insurance, which I am confused about as I was not told I needed this on my previous outside role (6months ago).

I have read a few articles about the insurance and the question I want to ask you all is, do I actually need this myself?
Is the insurance not just for the responsible party of determining the status? My thought is that if I was ever to be investigated by HMRC then it would be their fault if the status was incorrect?

Sorry if this question has been asked a million times. I tried scrolling through different threads but didn't find an answer.

[northernladuk]

In theory no you don't because the fee payer is responsible for the SDS and any fall out for getting it wrong. That said there is a lot of discussion about passing penalties down the chain. Check your contract to see if there are any clauses about IR35 penalties and fingering you for it.

I can only assume the agent wants you to get that if it does come down the chain they can offload it to you who will have insurance rather than have a massive bun fight where no one has the money.

Really bloody cheeky for sure but for the cost of the insurance is it worth putting up a fight? I can't believe the agent will let this one go as it helps cover their risk at no cost so it will be a take it or leave it situation.

Speak to QDOS who will have likely seen this before and will either give you some words or wisdon or sell you the insurance so you can get on with the gig.

[pr1]

In theory no you don't because the fee payer is responsible for the SDS and any fall out for getting it wrong. That said there is a lot of discussion about passing penalties down the chain. Check your contract to see if there are any clauses about IR35 penalties and fingering you for it.

I can only assume the agent wants you to get that if it does come down the chain they can offload it to you who will have insurance rather than have a massive bun fight where no one has the money.

Really bloody cheeky for sure but for the cost of the insurance is it worth putting up a fight? I can't believe the agent will let this one go as it helps cover their risk at no cost so it will be a take it or leave it situation.

Speak to QDOS who will have likely seen this before and will either give you some words or wisdon or sell you the insurance so you can get on with the gig.

I have asked QDOS this question in the past

Just to highlight, if your client or agency has requested you hold £100K of cover, this policy may not be appropriate as we can only cover your Limited Company liability, no other parties would be covered.

[northernladuk]

I have asked QDOS this question in the past

Just to highlight, if your client or agency has requested you hold £100K of cover, this policy may not be appropriate as we can only cover your Limited Company liability, no other parties would be covered.

Yep that's understandable. I just wonder if the agency intend to pass the responsibility down the chain which will be much easier if the person one down has insurance.

Need the OP to check their contract to see if it's got that pesky clause in it.

[jamesbrown]

I think there’s perhaps one or two companies out there offering supply chain insurance, but most were designed for Chapter 8 where the insured party is the intermediary (e.g., QDOS TLC35). As I’ve said before, IR35 insurance products are worthless, but this isn’t really a thread about insurance, more like a deluded supply chain that thinks it can transfer risk and whether you’re willing to participate in their delusion to keep the gig. Anyway, your call, but I wouldn’t personally accept that nonsense.

[Protagoras]

Assuming that this is a Ch.10 engagement ...

What is it that is supposedly being insured here? Is it legal costs, supply chain tax liabilities, both?

As N'LAD said, the contract needs to be looked at to identify if the supply chain is looking to pass liability to the contractor.

I was also reminded of this
https://www.ir35shield.co.uk/Article...tion-explained

[jamesbrown]

I expect they're looking for this, i.e., cover that is extended to the supply chain:

https://www.kingsbridge.co.uk/produc...protect-cover/

I can't comment on the T&Cs of this product, but this type of cover generally has clauses about there being a reasonable prospect of success.

[Protagoras]

IMHO, if someone in a supply chain needs insurance then they should be be purchasing it themselves.

[northernladuk]

I didn't follow this one too closely but I think these are the threads on the topic we are discussing.

https://forums.contractoruk.com/acco...insurance.html
https://forums.contractoruk.com/acco...35-losses.html
https://forums.contractoruk.com/busi...uses-ir35.html

[Marco2941]

Thank you for all of your replies and help with this, greatly appreciated!

I have checked through my contract and cannot see any clause that would potentially pass over liability to myself. I have read through the threads that Northernlad provided (thank you), but did not see anything similar.

Just to add, before I put this question to all of you I also spoke to HMRC. They stated that because the determination was not made by myself and I am working in the public sector, the responsibility is not on me and I would not require this type of insurance. They said only the person/s making the determination would need this, as everything would fall back on them.

Jamesbrown: https://www.kingsbridge.co.uk/produc...protect-cover/ This is the exact company and insurance that they pointed me towards!

After speaking to the agency again, they stated I needed this as this would protect me against any additional tax I may have to pay should an investigation take place. This was their sole selling point. They also made it clear that it would protect the whole supply chain, which I am in agreement with Protagoras and should be purchased by themselves and not all costs on myself.

Northernlad: I agree, cant see them letting it go as it protects them. Conversation definitely felt more of a take it or leave it, although they said they'd discuss it with management, not expecting anything from that.