Limited / Umbrella / IR35 Insurance / Qdos

**malvolio** · 8 May 2007, 23:46

I have no idea where to start with that lot.... How about three options?

1. Go permie... You have no idea what you are doing.

2. OK, so you want to be a contractor, go umbrella. You get to pay full PAYE and NICs, but IR35 doesn't enter the equation. Nice and safe because you don't know what you're doing. You don't need IR35 insurance.

3. You learn how the legal and economic rules work. Now you know what you're doing, get your own company, employ a decent accountant, think about yearly income not weekly. Ignore QDOS and other's clearly restricted insurance policies, join the PCG and use theirs but you probably won't need it anyway. Understand IR35 and how to take it out of the equation. Hey, you're a contractor...

Seriously, I suggest 1 then 2. You have too much learning to do to qualify for 3 right now. And welcome to reality.

**Sockpuppet** · 8 May 2007, 23:48

I do 3 with a healthy portion of "la la la" every morning for good measure.

**Lewis** · 9 May 2007, 09:10

Originally posted by malvolio

Ignore QDOS and other's clearly restricted insurance policies

QDOS offer the same insurance as the PCG offer for £100 (which also includes contract reviews) this is less than half the cost of the PCG plus package (yes I know you get other stuff thrown in as well with the PCG). And there are no restrictions on that QDOS policy that I am aware of. They are an equally valid choice of IR35 insurer IMHO.

The PCG insurance used to be through QDOS so out of interest where any of the 1400 cases defended by the PCG insurance that you often refer to actually defended by QDOS and not AbbeyTax?

**malvolio** · 9 May 2007, 09:26

Mostly they were by Lawspeed, although QDOS did some of them as well.

PCG membership is £120 - all contracts, no conditions. Basic QDOS cover is £99 subject to review (I think, happy to be proved wrong on that). Given the other stuff that PCG does, I think the costs are pretty much comparable.

**Lewis** · 9 May 2007, 10:13

Originally posted by malvolio

Mostly they were by Lawspeed, although QDOS did some of them as well.

PCG membership is £120 - all contracts, no conditions. Basic QDOS cover is £99 subject to review (I think, happy to be proved wrong on that). Given the other stuff that PCG does, I think the costs are pretty much comparable.

I agree they are comparable. I don't think you need a review for basic QDOS. Not trying to sell either. Just thought it fair, as QDOS don't post here, to put in a small defence on their behalf.

**Lewis** · 9 May 2007, 13:37

Originally posted by cartlidgea

1/ Qdos can review my contract and practice for £100 and get this in writting that I am outside IR35 then I work the 7 months and hope nothing happens once I finish

2/ Get Qdos to review my contract and practice then close the company as this will probably be my last contract. By closing the company does this stop the 6 year windows and prevent any investigations?

3/Buy the full Qdos IR35 cover for one year and cover the 7 months I work and hope there is no investigation years on

4/Buy the full Qdos IR35 cover for one year to cover the 7 months I will work and then close the company hoping that this will cover me

Ok, as I have QDOS insurance this affects me, I called and they say yes to keep the tax loss cover for past years you need to keep renewing (it is loosely like a car insurance policy). However they say once the company is closed down the chances of investigation reduce over time. The usual window is within 12 months of the end of your self assesment year, so you could argue that after a max of 2 years of the company being closed the chances of investigation are so small as to not need the insurance. You could for example just downgrade to the representation cover for £99 to be on the extra safe side rather than the full tax loss at £325. I guess it's down to what you want to do. But yes it is a pain.

Me personally .... I think I would probably just skip the tax loss part and go for representation cover only either via PCG or QDOS and keep for 2 years after contract (this would be same as one year of tax loss).

Think of it this way ... what are the chances of being investigated? Small. What are the chances of loosing if investigated with insurance? Very Very Small. (only 3 cases lost in 1400 via PCG). What is the worst case loss? 7 Months * 15% (I don't know the exact percentage). It's not going to bankrupt you.

**cartlidgea** · 9 May 2007, 17:37

Thanks all for your advice. I would be liable for £4k if I was found to be inside of IR35. I would lose £2.5K if I went umbrella. If I went umbrella and used dispensations I would only lose £750, I could prove I qualified for the dispensations but wouldnt have receipts for everything I claimed so could risk being charged with fraud although the tax man stated that the umbrella company would be done for this not me for not checking its employees claims properly and say the umbrella would owe the oustanding tax/ni ?

Giant stated that my contract was outside IR35, PCG have stated that my contract is outside of IR35 but neither of these really study your day to day working which is a big factor in the IRs decision. Reading IRs IR35 guide I could easily see that if they wanted to, they could probably win a claim against me being inside IR35 by the way I work e.g 9-5, same work place etc. So although both Giant/Qdos and PCG state I am outside I think if I was challenged I would lose and be found inside IR35.

So do I do as advised take simple pcg membership or qdos £99 cover (I assume this covers representation costs but what about your accountants costs or any other costs involved in a review such as court costs etc) for 2 years and hope if I was investigated they were good enough to win. Not bother with IR35 cover at all? I am just worried that knowing my luck I will lose the case or they investigated me after the 2 years cover expired. The last thing I want to do is pay out for insurance, accountants etc then end up with a £4K bill. I understand your comment malvolio and yes if I was contracting for 5 years I would just pay for the tax protection each year and forget about it but I dont want to shell out lots of money for 7 months insurance cover then maybe not be employed for a year.

What are the chances of being investigated would they see a closed company after 7 months and think its now worth pursuing for £4K?

Have been trying to get IR35 advice and check the dispensation claims from the Inland Revenue does anyone have any numbers for either their website is crap and the dedicated IR35 helpline is permenantly engaged!!

I was thinking of faxing over my contract for review by Inland Revenue and removing my name etc from it and asking for them to fax it back when reviewed what do you think least I would know one way or another whether I would be caught and assess the risk accordingly.

**malvolio** · 9 May 2007, 18:10

I think you should go permie. PCG don't do reviews. IR reviews are hardly impartial. Umbrellas don't do dispensations on expenses. You haven't even read what PCG, WDOS and anyone else actually offer under their insurance.

I mean, come on, you cannot be real, so stop trying to wind everyone up. It's not even vaguely amusing

**Lewis** · 9 May 2007, 19:05

Originally posted by cartlidgea

I was thinking of faxing over my contract for review by Inland Revenue and removing my name etc from it and asking for them to fax it back when reviewed what do you think least I would know one way or another whether I would be caught and assess the risk accordingly.

This will not help. HMRC can't even agree what contracts are in and out amongst themselves (there are cases of the same contract getting given different statuses from different tax offices). If you have had a review and been told you are outside IR35 then you are exceptionally unlikely to lose. You do NOT want to open this debate with the revenue. It is asking for trouble and I believe even invalidates some IR35 insurance policies.

Limited / Umbrella / IR35 Insurance / Qdos