Business Insurance cover

[malvolio]

Thanks guys. I thought the same.

Just for my info - Do you happen to have a link to any article which discusses this point about IR35 insurance specifically? (Will help in my discussion with the accountant)

Thanks.

You're missing a major point here. Your accountant advises (badly in this case). What actually happens is your decision. Tell him you will treat it as a business cost. If he disagrees, well there are plenty that understand it properly.

[Alchemy Accountancy]

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. (Posted in another thread too, an reposting here, to increase the visibility / responses )

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.

The answer is that it depends on the nature of the policy...

If the policy is to cover the additional accountancy and legal costs associated with defending an HMRC enquiry, then it would be allowable as a deductible expense for CT purposes.

If the policy covered the tax loss in the event of HMRC successfully challenging your IR35 status, then it would not be allowable as a CT deduction.

I understand that Qdos offer both types of cover.

[Costa]

We have the TLC35 Insurance with Qdos, which covers both - legal costs associated with defending an HMRC IR35 enquiry, as well as, tax loss in the event of HMRC successfully challenging our IR35 status.

So, in light of your above comment about "nature of the policy", will that TLC35 Insurance with Qdos be an allowable Business expense or not, in your viewpoint?

[Alchemy Accountancy]

We have the TLC35 Insurance with Qdos, which covers both - legal costs associated with defending an HMRC IR35 enquiry, as well as, tax loss in the event of HMRC successfully challenging our IR35 status.

So, in light of your above comment about "nature of the policy", will that TLC35 Insurance with Qdos be an allowable Business expense or not, in your viewpoint?

I would agree with your accountant and would disallow a TLC35 policy for Corporation Tax purposes.

To be clear, this doesn't mean that I'd ask you to repay it to the company (as you would a personal expense), it simply means that it is added back to the trading profit for the purpose of calculating Corporation Tax (and therefore you would not get 'relief' on the value of this expense) - you would still be able to pay it from the company so it would not be coming from your own pocket (i.e. after you have paid dividend tax).

Hope this gives you some reassurance!

[CatOnMat]

We have the TLC35 Insurance with Qdos, which covers both - legal costs associated with defending an HMRC IR35 enquiry, as well as, tax loss in the event of HMRC successfully challenging our IR35 status.

So, in light of your above comment about "nature of the policy", will that TLC35 Insurance with Qdos be an allowable Business expense or not, in your viewpoint?

Hi Costa, my experience tallies with the comment from Alchemy - I had a similar query ages back and got the following explanation from my accountant which does make sense in terms of not being wholly & exclusively a business thing given the element of personal protection in my TLC35 policy at the time:


The reason why your TLC35 policy doesn’t receive Corporation Tax relief is because the protection is for personal taxes, therefore this makes it a benefit for the company director (you). So whilst you’re able to purchase this through your business’ profits, the portion of the insurance expense which relates to TLC35 doesn’t receive Corporation Tax relief as there is a personal element to the expense.