Cover for tax investigation, facts?

[Chugnut]

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.

Agreed.

I sent a working practices doc to QDOS and they said they were very good. This was back in 2006, would the same document receive exactly the same glowing report with a 2008 hat on?

Client co are in the process of making id cards have "contractor" clearly marked and email addresses differentiating between employees and externals. I think this is a positive move and IR35 friendly. Whilst it may carry weight this year, it might be ignored the next, if new case law sets a precedent.

Since no end client I've ever dealt with has even heard of IR35, they can't be aware of the pitfalls and relied upon in the event of an inquiry. The whole thing is an intolerable minefield in my opinion, hence the insurance.

[Lewis]

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.

This has been discussed so many times before and poor old QDOS has already answered the same old questions many times before. Just search and you will find their responses. You could also call them on 01455 852030.

Basically there are many reasons why you might lose an IR35 case, as mentioned already, in fact too many to list (plus there are the ones that we don't yet know about). But a common one seems to be the client contradicting the contract that was signed.

As far as I am aware QDOS have never paid out the tax loss part of TLC35 because nobody with TLC35 has yet lost their case. They say they will not "back out" of paying out in the event they lose the case and I can't see what they can do to prove that so you just have to trust them.

I have always found them helpful and prompt to get back to me when I have IR35 concerns and so I have no reason to doubt them. But like anything in life it's all risk.

I think having no insurance is just insane, so the question is do you pay the extra £260. For me, it seems a small price to pay to sleep easy.

[Alan @ BroomeAffinity]

[QUOTE=Lewis;663683]As far as I am aware QDOS have never paid out the tax loss part of TLC35 because nobody with TLC35 has yet lost their case. They say they will not "back out" of paying out in the event they lose the case and I can't see what they can do to prove that so you just have to trust them.QUOTE]

But thats kind of the point isn't it. They've never lost a case because they only offer cover to people who aren't likely to lose. It would me more relevant to know how many of those companies that are covered have been selected for enquiry and how far down the appeals process these got.

I've no particular axe to grind with Qdos. I have clients who have the investigation cover. I just don't see the point of insuring against a risk that is non-existent.

[Lewis]

[QUOTE=Just1morethen;663847]

As far as I am aware QDOS have never paid out the tax loss part of TLC35 because nobody with TLC35 has yet lost their case. They say they will not "back out" of paying out in the event they lose the case and I can't see what they can do to prove that so you just have to trust them.QUOTE]

But thats kind of the point isn't it. They've never lost a case because they only offer cover to people who aren't likely to lose. It would me more relevant to know how many of those companies that are covered have been selected for enquiry and how far down the appeals process these got.

I've no particular axe to grind with Qdos. I have clients who have the investigation cover. I just don't see the point of insuring against a risk that is non-existent.

No it's not the point at all.

What you are saying is that you can only get TLC35 cover if you are GUARANTEED to win your case. There is no such guarantee, QDOS cannot guarantee they won't lose.

Yes they ask about your working practices but to be honest is it a small questionaire with maybe 20 questions that I think the vast majority of contractors can "pass". I have yet to hear of anyone refused the TLC35 prodiuct.

For example, one question says something like "I can provide a substitiue", your contract says you can so you say yes ... you now have TLC35 cover in place. You go to court and the upper level contract is produced, which you haven't seen and there is no substitution clause, further the client says (and this is increasingly common) sorry but we wouldn't accept a substitute. You lose your case ..... TLC35 should pay out.

Now you may say but QDOS won't pay because the contracts don't match. However QDOS acknowledge that contractors often don't get to see the upper level contract and therefore as long as you are not aware of any differences then the insurance is still valid. (QDOS - please correct me if I am wrong). They do advise contractors to try to ensure the contracts match but you can still get the insurance without having seen the upper level contract (as far as I am aware).

IR35 cases are getting more and more difficult to defend. In my opinion eventually someone with TLC35 cover is going to lose and then we will see what happens. I personally think QDOS will pay up. They might then reassess their product and/or fees but I don't think they are going to wriggle out myself. It would become common knowledge, be discussed everywhere, people would lose faith in them and it would kill their business overnight.

Just my opinion.

[Lewis]

Plus ... consider this .... ignore my argument completely and take yours instead - that you can only get cover if you cannot fail to win an IR35 case.

Then basically you are paying £355 to find out that you can't lose. Pretty good to me. Nobody else offers that service, I'd pay just because I want to know. At least I'd have peace of mind.

[Pegasus]

[QUOTE=Lewis;663957]
Now you may say but QDOS won't pay because the contracts don't match. However QDOS acknowledge that contractors often don't get to see the upper level contract and therefore as long as you are not aware of any differences then the insurance is still valid. (QDOS - please correct me if I am wrong).

I personally think QDOS will pay up. They might then reassess their product and/or fees but I don't think they are going to wriggle out myself. It would become common knowledge, be discussed everywhere, people would lose faith in them and it would kill their business overnight.
[QUOTE]

Yes, if QDOS can also please confirm the above, then I think the TLC is a very good value for money. My apprehension is mainly about QDOS (or other insures) trying to wriggle out of payment (am not so much concerned about whether and why a case may be lost, as long as QDOS, or any other insurer, can confirm that the liability will be covered).

Thanks.

[Alan @ BroomeAffinity]

I never said that they'd only take on risk someone who is GUARANTEED to pass is said "aren't likely to lose". That's completely different.

I know of at least 2 contractors who failed the Qdos working practices test.

And while I agree that £300-odd is worthwhile to know you can't lose, surely the very fact that you would then know yuo can't lose proves the pontlessness of the insurance cover.

[Qdos Contractor]

Yes, if QDOS can also please confirm the above, then I think the TLC is a very good value for money. My apprehension is mainly about QDOS (or other insures) trying to wriggle out of payment (am not so much concerned about whether and why a case may be lost, as long as QDOS, or any other insurer, can confirm that the liability will be covered).

Thanks.

Think I covered this particular question earlier in the thread, but just to reaffirm that we would never attempt to pull out of paying any claim. First and foremost we are tax specialists and have been able to offer policies like TLC35 off the back of our expertise.

Lewis is absolutely spot on in his posts. IR35 enquiries are becoming more difficult to defend and, personally, I will actually be surprised if we don't have to pay out on the TLC policy at some point in the near future.

Give us a call if you would like to have a chat about it. We are quite friendly!

[Qdos Contractor]

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.

£5k - £9.5k salary = £750 excess
£9.5k - £15k = £500
£15k+ = £250

Note that the excess is only payable if we pay out on the liabilities (not the representation).

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?

I think there is a third party property damage excess of £250 on the PL policy, but that's about it. If you are looking to buy all three give us a call and we can sort out a discount.

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).

As per my previous post.

[Pegasus]

Thanks

Qdos - thanks a lot for your clarifications.
I will be getting in touch with your team very shortly.

Thanks.