IR35 Insurance?

[centurian]

will it still cover son-of-IR35?

The important thing about IR35 insurance is that it only covers investigations started during the period you have insurance - it doesn't cover you for a further 5 years that you can be investigated for - which is why you need to renew insurance every year, even if you are no longer within IR35. However, there is no guarantee that you can get an insurance renewal each year, especially in the face of "game changers".

When the new legislation is announced, there will be several key points to this

1. What will happen to IR35 for the previous 5 years. In theory HMRC could investigate you for this period under the IR35 criteria. Personally, I don't think they would bother, but you may need to retain insurance for this period. Insurance providers will probably (not definatley) still provide cover for this, given that the risks of investigation will probably be lower.

2. Will you be able to get insurance for work moving forward - this will entirely depend on what the new legislation is. Insurance providers may raise their prices significantly, lower them if they feel it's clearer, or bail out of the market completely if they seem the risk too high. We'll just have to wait and see

3. An unlikely scenario is that the new legislation will apply retrospectively for the past 6 years - kind of "clarifying what disguised employment always has been". Expect insurance providers to bail out of the market en-masse if this happens, leaving contractors to sweat it for the next 5 years as they won't be able to renew their insurance - or if they can, the price will be so high that they might just as well cough up to HMRC.

[xxxxmmmm]

The important thing about IR35 insurance is that it only covers investigations started during the period you have insurance - it doesn't cover you for a further 5 years that you can be investigated for - which is why you need to renew insurance every year, even if you are no longer within IR35. However, there is no guarantee that you can get an insurance renewal each year, especially in the face of "game changers".

When the new legislation is announced, there will be several key points to this

1. What will happen to IR35 for the previous 5 years. In theory HMRC could investigate you for this period under the IR35 criteria. Personally, I don't think they would bother, but you may need to retain insurance for this period. Insurance providers will probably (not definatley) still provide cover for this, given that the risks of investigation will probably be lower.

2. Will you be able to get insurance for work moving forward - this will entirely depend on what the new legislation is. Insurance providers may raise their prices significantly, lower them if they feel it's clearer, or bail out of the market completely if they seem the risk too high. We'll just have to wait and see

3. An unlikely scenario is that the new legislation will apply retrospectively for the past 6 years - kind of "clarifying what disguised employment always has been". Expect insurance providers to bail out of the market en-masse if this happens, leaving contractors to sweat it for the next 5 years as they won't be able to renew their insurance - or if they can, the price will be so high that they might just as well cough up to HMRC.

Thanks for detailed reply.
So everything depends on a new legislation and until it is out confusion continues

[centurian]

I am afraid, with a new system no insurance will be available

If no insurance is available - then it will be because the new rules are so tough - that you are basically caught anyway.

The whole reason you can get insurance for IR35 in the first place is that the risks of being nailed are statistically very low. You can't get insurance for events which are highly likely to happen - at least not at a decent price.

So everything depends on a new legislation and until it is out confusion continues

Yep. Pretty much - and that's assuming that the new rules are clear themselves.