Outside IR35, but being asked to pay for IR35 insurance...

[KDSQTS]

I've just been offered a contract deemed "Outside IR35", however my agent is insisting I pay some IR35 costs. Namely, paying ~£100 per contract for the IR35 assessment and paying ~£150pa for an insurance policy that protects the "party held liable by HMRC in an IR35 investigation" i.e. the end Client or Agency (not me).

I'm a little uncomfortable with this. Prior to April 6th 2021, I paid for IR35 assessments and insurances because I was liable for mistakes. Although this has now shifted to the end Client, I'm still being expected to carry these costs.

Has anyone else seen this sort of behaviour? Is this the new normal? Is flowing these costs down to the Contractor a fair redistribution of the increased financial burden to the Client and/or Agent, or is this a step too far?

[saptastic]

At least they highlight up front and not small print in the contract.
Not much to pay but in principle not aware that these costs are being passed down the food chain.

[Fraidycat]

Seems like the recruitment agents are trying on the ways of the lettings agents, before the government banned them.
They would charge prospective tenants all sorts fees, like for getting references, credit checks, renewal fees.
If it does become the new normal i cant see the government coming to our aid.

I would tell them where to go, they are after-all going to get a fat commission off the contract.

It is a game of chicken, you risk losing the contract by saying no, they risk losing the commission if you say no and they don't back down either.

[Fraidycat]

On other thing, are they asking you to pay upfront. Or are they suggesting that they will take these fees from your first payment?

[eek]

I pointed out (back I think in March) to QDOS that were the end result to turn out to be "inside IR35" the cost would be illegal deduction were the worker to be required to pay it. Since then I don't think QDOS have appeared on this site.

My question would be a simple one to the agent - what is the purpose of the review (given that you've already side it's outside) and what is the purpose of the insurance (given that you've already side it's outside and I expect you have the SDS determination to show as much).

Edit found the thread - it was actually in December Asked to pay for IR35 Assesment - Contractor UK Bulletin Board

[northernladuk]

I've just been offered a contract deemed "Outside IR35", however my agent is insisting I pay some IR35 costs. Namely, paying ~£100 per contract for the IR35 assessment and paying ~£150pa for an insurance policy that protects the "party held liable by HMRC in an IR35 investigation" i.e. the end Client or Agency (not me).

I'm a little uncomfortable with this. Prior to April 6th 2021, I paid for IR35 assessments and insurances because I was liable for mistakes. Although this has now shifted to the end Client, I'm still being expected to carry these costs.

Has anyone else seen this sort of behaviour? Is this the new normal? Is flowing these costs down to the Contractor a fair redistribution of the increased financial burden to the Client and/or Agent, or is this a step too far?

So what EXACTLY are they asking for. The contract assessment is from a 3rd party like QDOS? Just the standard assessment we used to have? And what exactly is the insurance policy they are after? Is it again, the standard TLC35 type thing that QDOS offers? There is nothing hooky here, they are just asking for the standard diligence we all should have been doing before?

I've got to admit I think I will still be getting my next contracts checked. I know it's responsibility of the client but for the price of it I don't want to be in a position where the contract doesn't match the SDS and have a potential nightmare on my hands. It's not been proven yet if the actual contract will come under scrutiny even if the SDS says outside and I don't think it's wise to do no diligence just because some untested and misunderstood legislation has appeared. It's just a cost of doing business and staying safe IMO.

So, ignoring arguments of whether these are valid and who should pay for a moment. If you purchase TLC35 you also get a free contract assessment with it, so if the agent just wants to see evidence of both you could knock this cost down to a single amount. So now you have a stake in the ground, whatever happens with the argument about should you have to do it, it's going to cost you £150. Is this worth a fight with the agent and putting your contact in jeopardy?

Once you have that avenue covered then you can think about if you are going to fight the agency on this. The responsibility sits with the client so do you need these now? I'm not sure and it will be interesting to see if this thread comes to solid answer. If there is any level of conjecture or confusion then the £150 seems a safe out. Remember it's not £150 to you as well as it is an expense so reduces tax liability.

[eek]

So what EXACTLY are they asking for. The contract assessment is from a 3rd party like QDOS? Just the standard assessment we used to have? And what exactly is the insurance policy they are after? Is it again, the standard TLC35 type thing that QDOS offers? There is nothing hooky here, they are just asking for the standard diligence we all should have been doing before?

I've got to admit I think I will still be getting my next contracts checked. I know it's responsibility of the client but for the price of it I don't want to be in a position where the contract doesn't match the SDS and have a potential nightmare on my hands. It's not been proven yet if the actual contract will come under scrutiny even if the SDS says outside so I'd be playing it safe for the moment.

So, ignoring arguments of whether these are valid and who should pay for a moment. If you purchase TLC35 you also get a free contract assessment with it, so if the agent just wants to see evidence of both you could knock this cost down to a single amount. So now you have a stake in the ground, whatever happens with the argument about should you have to do it, it's going to cost you £150. Is this worth a fight with the agent and putting your contact in jeopardy?

Once you have that avenue covered then you can think about if you are going to fight the agency on this. The responsibility sits with the client so do you need these now? I'm not sure and it will be interesting to see if this thread comes to solid answer. If there is any level of conjecture or confusion then the £150 seems a safe out. Remember it's not £150 to you as well as it is an expense so reduces tax liability.

But IR35 is no longer anything to do with us - I fully understand getting a contract reviewed for actual legal issues but IR35 ones - forget about it...

The thing is I used to get contracts reviewed (and I still would) but I never paid for TLC35 as at the time IPSE was enough to cover the risk of a case...

And before April those things were optional and for my own benefit, the agent was not making it compulsory and expecting us to pay for something that would only benefit other people.

As I said back in December this is for the benefit of agents so the agents should be paying for it and it should be coming out of their margin. If that means paying my company £5 or £10 less a day so be it - but we really shouldn't be paying their costs for them.

[northernladuk]

But IR35 is no longer anything to do with us - I fully understand getting a contract reviewed for actual legal issues but IR35 ones - forget about it...

Yeah I get that but spending too much time on here, being a cautious type and this all being too new and confusing I'm content getting it checked just for now. Hopefully I'll only have to do it once a year or less, at worst two or three times in a twelve month period. Helps me sleep at night so I'll probably continue for now. Possibly a waste of time and money but when that time is a few emails and than money is sub £100 I'm struggling to see why I shouldn't.

I replied before the extra lines appeared and yes I'd agree. It would be nice to think that some common sense would be applied or even a bit of push back but if, which is likely, the agent will be an arse and won't play for some stupid reason then it's not a deal breaker. In most cases they'll be paying the contractors LTD £5 or £10 a day less than they should anyway so they can use that

[KDSQTS]

On other thing, are they asking you to pay upfront. Or are they suggesting that they will take these fees from your first payment?

They are asking me to get an independent insurance policy that covers "the party held liable by HMRC in an IR35 investigation, whether this is you or your fee payer" and provide them with a certificate of insurance before they will enact the contract.