Cover for tax investigation, facts?

[Qdos Contractor]

Sorry, there's still some conflicting information here. You dont review the contract but instead rely on the contractor answering 20 or so yes \ no questions. Even if the contractor is totally honest, the client and hmrc may have a different interpretation on the actual circumstances.

That's what the full insurance is for. Sadly we can never rely on an end clients cooperation - it's not the contractor's fault if they are stitched up by the client and HMRC. The insurance serves to cover that risk.

And you reckon you've never lost (or only lost 1 or 2) IR35 investigations on that basis? I find it extremely difficult to believe you've never lost a case based on the 20 or so yes \ no questions as HMRC can literally ask a hundred or more!

Out of the 1000+ cases we have won all but two. Of course, not all of the wins were clients who have the full TLC insurance - many, for instance, were from the period when we were insurers for the PCG membership. Therefore a lot of successes involve clients who have never answered any of our application questions.

HMRC ask hundreds of questions in an attempt to confuse and catch out contractors and end clients. Whilst some aspects of IR35 can be complex, we are confident that we've covered all of the vital elements fully in our application form.

[eazy]

Minimum Salary

Question for Qdos:

Is there a minimum salary level for the TLC insurance or 5K/pa is acceptable?

[Qdos Contractor]

Question for Qdos:

Is there a minimum salary level for the TLC insurance or 5K/pa is acceptable?

£5k is the minimum level.

[Pegasus]

Hi Qdos,

A few quick questions:

1) Browsed through your website, but did not find the "excess" applicable to TLC35. I heard that it depends on the Director's Salary, so want to read the "excess" levels for various salary levels.

2) Are there any "excess" applicable to Professional Indemnity, Employers Liability and Public Liability too? If we take all 3 together, is there any discount offer?

3) Once we take the TLC35 from you, then is there any scenario in which you would back out from a claim made against you (in case the IR35 case is lost).

Thanks.

[Alan @ BroomeAffinity]

As an accounting firm, we've been looking at IR35 insurance for our clients. Personally, I think that the investigation cover is a worthwhile insurance especially if its only £99.

I'm less convinced about the higher level of cover whihc pays the tax liabilities as well: Obviously an insurer has to manage his risk and in these kinds of insurances this involves a review of the working practices. Presumably cover will only be offered if the working practices reflect that the contract is outside IR35? In which case, why do you need the cover? Surely, if the contract is outside IR35, then all you need is representation cover as, if you are IR35 compliant and have good representation, you would never need the liabilities cover. And if it is likely that you will need the liabilities cover, then your working practies will preclude you from getting it?

[QwertyBerty]

I'm less convinced about the higher level of cover whihc pays the tax liabilities as well: Obviously an insurer has to manage his risk and in these kinds of insurances this involves a review of the working practices. Presumably cover will only be offered if the working practices reflect that the contract is outside IR35? In which case, why do you need the cover?

In case the judge has a bad night's sleep? Or you lose on a technicality. Or the client says something completely at odds with how you actually worked 4 years ago (how's he gonna remember after 4 years)

QB.

[Chugnut]

As an accounting firm, we've been looking at IR35 insurance for our clients. Personally, I think that the investigation cover is a worthwhile insurance especially if its only £99.

I'm less convinced about the higher level of cover whihc pays the tax liabilities as well: Obviously an insurer has to manage his risk and in these kinds of insurances this involves a review of the working practices. Presumably cover will only be offered if the working practices reflect that the contract is outside IR35? In which case, why do you need the cover? Surely, if the contract is outside IR35, then all you need is representation cover as, if you are IR35 compliant and have good representation, you would never need the liabilities cover. And if it is likely that you will need the liabilities cover, then your working practies will preclude you from getting it?

This isn't an exact science though is it? The high profile Dragonfly case threw cold water on some of the indicators many of us thought would help demonstrate that we were in business on your own account.

Obviously there were a few key points which didn't help Dragonfly's case, but Hector does throw a few curveballs. The cost of TLC35 is paid for by a single day's rate and is one I'm personally happy to incur. I'm amazed so many people argue the toss over a few hundred quid.

[Pegasus]

Just1morethen - Very true. I have also been thinking exactly the same.

I have already got my Contract and Working Practices reviewed and both of them are outside IR35. At Qdos website, I see that the tax investigation insurance is £99 and the Tax Liability cover is £355. So want to evaluate the merits of taking the Tax Liability Cover, for which the main questions are:
1) What are the scenarios in which I can still lose an IR35 case?
2) Would there be any scenario in which the Insurer would back out from a claim, if the IR35 case is lost?

Once Qdos, or any other IR35 insurers, provide me the answer to the above, I will be able to decide whether to take the tax liability insurance or just take the tax investigation insurance only.
(Basically need to find out whether the few hundred extra ££s really do offer much better peace of mind!)

Thanks.

[Alan @ BroomeAffinity]

Good points made QB and Chugnut. I suppose I'm just thinking out loud. For £300-odd quid most of my clients would probably take the cover on.

When you look at the working practices in the Dragonfly case, though, I think its doubtful that Qdos (or any other) would give full cover.

[Pegasus]

Thanks QB and Chugnut.

Chugnut - As you correctly said, the additional cost of TLC is not much at all.

Only thing that I am a bit apprehensive about is whether the insurer will pay-up the liability smoothly, or will they try to work their way out of it? So want to know the type of cases where they will easily pay up and where they will back out.
(Like for example, though that is not at all likely in my case, but in general, if the client says something that contradicts what the contractor said, will the insurer say that the contractor mis-represented the facts, and hence is not eligible for the claim?)

Thanks.

PS: I have recently joined the group and my posts are moderated, so there may be a significant delay in my postings getting published, which may make some of them look outdated.