Another IR35 Indemnity Clause

[vwdan]

Saw the other thread sort of got resolved, so figured I'd post my own although it's very very similar.

Found this clause in a Private Sector contract:

INDEMNITY

The Consultancy shall indemnify and keep indemnified [AGENCY] against any Losses suffered or incurred by [AGENCY] by reason of any proceedings, claims or demands by any third party (including specifically, but without limitation, HM Revenue and Customs and any successor, equivalent or related body pursuant to the IR35 Legislation and/or any of the provisions of Income Tax Regulations and/or any supporting or consequential secondary legislation relating thereto or NICs Legislation

I pushed back before taking it to QDOS and they changed it as follows:

INDEMNITY

The Consultancy shall indemnify and keep indemnified [AGENCY] against any Losses suffered or incurred by [AGENCY] by reason of any proceedings, claims or demands by any third party, that are incurred as a result of the misconduct or misrepresentation of the Consultancy, (including specifically, but without limitation, HM Revenue and Customs and any successor, equivalent or related body pursuant to the IR35 Legislation and/or any of the provisions of Income Tax Regulations and/or any supporting or consequential secondary legislation relating thereto or NICs Legislation). Such indemnification shall be limited to the cost of the Losses or otherwise to a maximum value of £1,000,000

Which is certainly better, but I'm still very concerned. QDOS have confirmed that my insurance won't cover this, but also that it's effectively a clause that can't be invoked as they wouldn't be liable anyway.

I'm getting a call booked in with their contracts team to see what they say - but anyone got any words of wisdom in the meantime? Thinking I may have to go the full legal review route. (Or sign it and ensure my retained profit is low!)

[Lance]

I can't see how it should become a problem.

It's the agency making sure that if you don't pay the correct taxes, AND if they are held liable, then your company has to pay.

This would only come into play if your client is a public body, AND the agency could be found liable for an incorrect IR35 determination. As the client is responsible in this case I can't see how it comes into play.

If it's a private body yourCO is liable anyway and the only time HMRC would pursue the agency is if yourCO was bust. In that case sueing yourCO is of little value.


I think this could be the agency trying to make sure they are covered against future legislation.

[DaveB]

Saw the other thread sort of got resolved, so figured I'd post my own although it's very very similar.

Found this clause in a contract:



I pushed back before taking it to QDOS and they changed it as follows:



Which is certainly better, but I'm still very concerned. QDOS have confirmed that my insurance won't cover this, but also that it's effectively a clause that can't be invoked as they wouldn't be liable anyway.

I'm getting a call booked in with their contracts team to see what they say - but anyone got any words of wisdom in the meantime? Thinking I may have to go the full legal review route. (Or sign it and ensure my retained profit is low!)

The reference to misconduct or misrepresentation is the bit you need to get included. That means the agency would have to show that you had either been negligent or deliberatley done something to affect the outcome of an IR35 assessment that would have resulted in you being inside instead of outside.

If you do due dilligence by getting a contract revue and maybe even a CEST assessment done and keep the details of the answers you gave, then unless these were based on false information they shouldn't be able to make a claim.

[vwdan]

I can't see how it should become a problem.

It's the agency making sure that if you don't pay the correct taxes, AND if they are held liable, then your company has to pay.

This would only come into play if your client is a public body, AND the agency could be found liable for an incorrect IR35 determination. As the client is responsible in this case I can't see how it comes into play.

If it's a private body yourCO is liable anyway and the only time HMRC would pursue the agency is if yourCO was bust. In that case sueing yourCO is of little value.

I kind of agree, and I won't lie, after the ammendments I was pretty close to just signing. But, it's this that I'm sticking on:

I think this could be the agency trying to make sure they are covered against future legislation.

Again, inclined to agree, but why I should take on that liability when I have no insurance that can cover it. Yes, it's an unlikely course of events - but if it's so impossible, then the agency shouldn't need the clause to begin with. They aren't going to sign a contract that says they'll give me £20 million in the event of a nuclear apocalypse, so I'm not sure why I should sign this one.

[TheCyclingProgrammer]

Simple solution: don’t sign any contract with this clause or similar with an end date past when the IR35 private sector changes are due to come in. When we have a better idea of what is going to happen, renegotiate an extension if necessary.

I have a feeling that with the QDOS amendment this clause would be very difficult to make stick as the client would need to prove you’ve misrepresented yourself.