IR35 Insurance - Cost

[KennyG]

Cheshire Cat didn't seem to get a reply and I'm just wondering - it's all very well in theory, paying for an Insurance policy which will cover you for tax & NIC should you lose an IR35 investigation against HMRC, but the first thing any Insurance Company does in the event of a claim - be it motor, household, travel or any type of insurance - is try to find a way of avoiding a payout.

So - how can we be guaranteed that Qdos would indeed stump up if push came to shove?

[Qdos Contractor]

Cheshire Cat didn't seem to get a reply and I'm just wondering - it's all very well in theory, paying for an Insurance policy which will cover you for tax & NIC should you lose an IR35 investigation against HMRC, but the first thing any Insurance Company does in the event of a claim - be it motor, household, travel or any type of insurance - is try to find a way of avoiding a payout.

So - how can we be guaranteed that Qdos would indeed stump up if push came to shove?

You can’t compare our TLC35 policy to motor, household or travel insurance where there is a claim and an instant payout or rejection. If one of our insured contractors has an enquiry, we will be representing them for upwards of 2 years before the case could possibly be lost. If there were any blatant fabrications in the initial application we would pick them up very early on in the enquiry (this has never happened). If not, and the case did go against us, the policy would pay out. There would be no way we could “avoid a payout”.

The TLC policy has been running for several years now. The liabilities portion hasn’t been used yet because of our successful defence record, not because we’ve rejected any claims. However, the policy has given many contractors under enquiry the complete peace of mind that they wouldn’t face a hefty bill – plenty will testify to that effect.

There is no way I can give a blanket ‘guarantee’, but it you complete the application accurately the policy will fully cover you. PM me if you want to discuss at length.

[malvolio]

You can’t compare our TLC35 policy to motor, household or travel insurance where there is a claim and an instant payout or rejection. If one of our insured contractors has an enquiry, we will be representing them for upwards of 2 years before the case could possibly be lost. If there were any blatant fabrications in the initial application we would pick them up very early on in the enquiry (this has never happened). If not, and the case did go against us, the policy would pay out. There would be no way we could “avoid a payout”.

The TLC policy has been running for several years now. The liabilities portion hasn’t been used yet because of our successful defence record, not because we’ve rejected any claims. However, the policy has given many contractors under enquiry the complete peace of mind that they wouldn’t face a hefty bill – plenty will testify to that effect.

There is no way I can give a blanket ‘guarantee’, but it you complete the application accurately the policy will fully cover you. PM me if you want to discuss at length.

All very true, but you can't escape the fact that if the contract is clearly IR35 caught, you (or anyone else) simply won't insure it. Given the win/loss ratios you are managing that is not a bad working assumption, of course, and clearly you aren't going to take on a risk for the fun of it.

However, from the potetnial purchaser's viewpoint, the insurance is against an event that you are saying will almost certainly not happen; so why not simply stay with PEI insurance, ignore the vanishingly small risk of a tax repayment demand as the result of a lost case and save a fairly significant premium? That is the underlying question some might struggle with.

[Qdos Contractor]

I think you're underestimating the situation. It's impossible for us to look at someone's working practices and say that they won't be caught by IR35 - the legislation is a matter of opinion and has never been black and white.

We only hear about cases lost at the Special Commissioners, but what about those who concede or lose before that? We've got countless IR35 enquiries ongoing and, from a personal perspective, the cases I have dealt with have never been easy to win and take a massive amount of time and effort.

Therefore it's frustrating when people are blasé about IR35, saying we are only taking on cases with minimal risk. Many of the enquiries we've fought have been touch-and-go and we certainly didn't envisage that we would never pay out on a TLC35 policy (up to now, of course).