IR35 Insurance / QDos Consulting

[Qdos Contractor]

Maybe this has changed, but when I renewed mine last year, there was a list of my contracts (which they have reviewed as part of the service) which would be covered.

We include a list of the contracts that are covered by the policy, although we don't need to review them in order for them to be included. Providing, to the best of your knowledge, the application statements apply to any new agreement, it can be added straight away.

Obviously you get unlimited free contract assessments with the policy so it's always a good idea to have the contract checked, but it's not a stipulation.

[DirtyDog]

We include a list of the contracts that are covered by the policy, although we don't need to review them in order for them to be included. Providing, to the best of your knowledge, the application statements apply to any new agreement, it can be added straight away.

Obviously you get unlimited free contract assessments with the policy so it's always a good idea to have the contract checked, but it's not a stipulation.

Ah - mine have all been reviewed as standard, so appeared in the list automagically.

[Qdos Contractor]

Ah - mine have all been reviewed as standard, so appeared in the list automagically.

That's the best way to do it.

[SteelyDan]

Where did you hear that?

IR35 Guide - Contractor Weekly

IT contractors warned on IR35 substitution clauses :: Contractor UK

Indeed, but I expected better from you tbh.

Just to clarify one of your points, the reality of what people on here may have in their contract in relation to RoS:

"In the eyes of the contractor, a right of substitution is often seen as a shortcut, guaranteeing that a contract will be outside IR35. This approach however risks being a little simplistic. For a right of substitution in a contract to achieve this desired result, it is critically important that the right is valid. For if the Revenue can show that the purported right in the contract is in fact a 'sham' (a technical term, meaning ‘something other than it purports to be’), then two consequences will follow:

1 not only will the claimed right of substitution not have the desired effect of taking the contractor outside IR35, but

2 the very existence of a 'sham' term in the contract will cast doubt on the validity of the other potentially IR35 helpful terms in the contract.

Thus it can be dangerous to include a right of substitution in a contract where that right is not in fact realistic or valid, since the presence of a 'sham' term can itself have IR35 negative effects." (Egos)

How many times has anyone on here ever exercised their RoS clause? I suspect not many, if any, at all. Therefore it will be a sham, and therefore have no bearing (in fact a negative bearing) on the IR35 status. So all of you who have a RoS in your contract and think you are def outside of IR35, think again.

So, as for it being the 'strongest indicator', well if it's not a 'sham' that may be true, however, I suspect in reality (& in practice), & in most (98%?) cases for people on here it will be a 'sham', and therefore not a strong indicator at all.

So, back to QDos, you respond 'yes I have a RoS clause', you take the insurance, pay your dues, etc. Then you get a HMRC enquiry/investigation and they show that 'the strongest indicator' (your RoS) is a sham.

Where does your QDos cover leave you?
Probably nowhere because they never tested the validity of your RoS clause; because you never used it, because it was a sham...and of course QDos couldn't test it anyway because they have only seen the written contract and the RoS provision, but you haven't actually started in the role yet.

And just for the record, I have no personal gripe against, or experience of QDos, or any other organisation which provides this type of advice/cover. I'm just sceptical, as maybe others should be

[Qdos Contractor]

So, back to QDos, you respond 'yes I have a RoS clause', you take the insurance, pay your dues, etc. Then you get a HMRC enquiry/investigation and they show that 'the strongest indicator' (your RoS) is a sham.

Where does your QDos cover leave you?
Probably nowhere because they never tested the validity of your RoS clause; because you never used it, because it was a sham...and of course QDos couldn't test it anyway because they have only seen the written contract and the RoS provision, but you haven't actually started in the role yet.

You're responding that, to the best of your knowledge, you have a genuine RoS. The risk of HMRC speaking to your end client etc. and deciding otherwise is the very risk we are covering.

[SteelyDan]

You're responding that, to the best of your knowledge, you have a genuine RoS. The risk of HMRC speaking to your end client etc. and deciding otherwise is the very risk we are covering.

Thanks for the response QDos

[malvolio]

You're responding that, to the best of your knowledge, you have a genuine RoS. The risk of HMRC speaking to your end client etc. and deciding otherwise is the very risk we are covering.

Good point.


However, to answer Steely Dan's point. it is the Right that is important, so whether or not you exercise it is irrelevant, and not exercising it (or even not expecting to) does not make it a sham. That will only happen if the agency has offered you a RoS that is not honoured in their contract with the client. I was greatly annoyed in one lost IR35 case (Dragonfly?) that the Tribunal judge completely ignored the minor detail that the client and the agency knew substitution was not an option but still allowed it to be included in the in the agency/contractor contract. That alone should have been grounds for an appeal since the bottom contract was clearly a sham. As always, the worker carried the can for the bad practices of the agency.


Also, of course, RoS is potentially risky, D&C and MOO are far more relevant to the overall assessment.

[Jessica@WhiteFieldTax]

We don't deal with Qdos as a firm any more since they sold their intermediaries insurance arm, Qdos Taxwise to AN Other (a separate, an unhappy story, but not Qdos's fault).

However, true story when we did deal with Qdos:

~ Day 1 - Inspector starts an enquiry into a Company tax affairs. Notice sent to us as accountant and company RO (also us) 2nd class post.

~ Day 3 - 10am - client faxes application to us for insurance with Qdos - it was at the start of a new policy year, and I think he was having an admin day.

~ Day 3 - 11am - post arrives with HMRC letter from Day 1

~ Day 3 - 11:30am - I call HMRC is there any way director knew of enquiry. We concluded no.

~ Day 3 - 12:30pm - Qdos accepted claim

They had every chance to walk away, and they didn't.

[jamesbrown]

[...] However, true story when we did deal with Qdos [...]

This is a useful example, as it demonstrates the point about reputation.

Yes, same type of cover.

We would have to weigh up the 'prospects of success'.

Understandable. So, in terms of your tax liability coverage, I think you're saying that, if it is determined at the outset that the case does not have a realistic prospect of success, the cover is void, but otherwise the case is carried forward and, from that point on, any loss will be covered up to the policy limits (and subject to other T&C, such as the policy holder not telling porkies or otherwise damaging the case). Is that correct? I understand that the chances of there not being a realistic prospect of success might be small.

[Qdos Contractor]

Understandable. So, in terms of your tax liability coverage, I think you're saying that, if it is determined at the outset that the case does not have a realistic prospect of success, the cover is void, but otherwise the case is carried forward and, from that point on, any loss will be covered up to the policy limits (and subject to other T&C, such as the policy holder not telling porkies or otherwise damaging the case). Is that correct? I understand that the chances of there not being a realistic prospect of success might be small.

In a nutshell, yes.