Reply to: Insurance question

[WordIsBond]

Not worth arguing over.

Smartest thing either of us has said on this thread.

[jmo21]

Got anything useful to post?

[malvolio]

Not supportable. Two points.

1. When I use a subcontractor, they are working under MY contract for services. The arrangement that I have with the subcontractor is simply not relevant to my clients. And it certainly is exercising my right of substitution. I bill for their work the same as I bill for mine. As long as they are able to do the work, it's not an issue. Ok, arguably in my case it is usually helpers rather than strict substitution, but I am assigning people (I use both subcontractors and employees) to do stuff I could be doing. It really makes no difference at all whether I'm paying an employee to do it or paying a subcontractor to do it, or whether I'm making a profit on their work or not. Either amply demonstrates that I am not just a disguised employee.

2. Employer Liability cover proves nothing. If you are investigated, and try to claim that you have Employer Liability cover so that you can send in an employee as a substitute, they'll of course ask, "Where's your employee?" If you don't have one, then the EL as proof of ROS is simply a fiction. It won't help your case one little iota.

It MIGHT help your case if your client requires it, just like requiring PII helps marginally. You don't require your employees to buy EL or PI cover, you buy it for them. So if the client puts those requirements in the contract it marginally strengthens your case that they view you as a business and not a disguised employee.

But if you just decide to buy the cover to strengthen your IR35 case, you're wasting your money.

Which bit of "obscure" are you having trouble with? The argument has been used as part of a wider discussion, many years ago. Clearly I'm not the only one to have heard of it. That doesn't mean I think it's valid or even sensible.

But if we're being pedantic, there's a clear distinction between substitute and subcontractor and the former is not necessarily (arguably not even) under your SD&C since they are replacing you, not doing your job for you.

My ELI costs about £19 a year, for £10m with no excess. Not worth arguing over.

[TheCyclingProgrammer]

The place I am insisted on EL and when asked said it was a good pointer for IR35 as I may have to substitute ?

The argument is that in order to supply a worker acting on YourCo's behalf (whether they are an employee of YourCo or sub-contracted) then you need to have EL to cover them. However, seeing as EL can be arranged in a matter of minutes its not an argument I particularly buy. Not having EL in place when signing the contract does not, IMO, create a serious obstacle that would prevent you arranging a substitute at short notice.

[WordIsBond]

It's an obscure argument, but a supportable one. The assumption is that if you have a viable RoS then you are able to send in another worker (not, note a sub-contractor: they are working under your contract for services);

Not supportable. Two points.

1. When I use a subcontractor, they are working under MY contract for services. The arrangement that I have with the subcontractor is simply not relevant to my clients. And it certainly is exercising my right of substitution. I bill for their work the same as I bill for mine. As long as they are able to do the work, it's not an issue. Ok, arguably in my case it is usually helpers rather than strict substitution, but I am assigning people (I use both subcontractors and employees) to do stuff I could be doing. It really makes no difference at all whether I'm paying an employee to do it or paying a subcontractor to do it, or whether I'm making a profit on their work or not. Either amply demonstrates that I am not just a disguised employee.

2. Employer Liability cover proves nothing. If you are investigated, and try to claim that you have Employer Liability cover so that you can send in an employee as a substitute, they'll of course ask, "Where's your employee?" If you don't have one, then the EL as proof of ROS is simply a fiction. It won't help your case one little iota.

It MIGHT help your case if your client requires it, just like requiring PII helps marginally. You don't require your employees to buy EL or PI cover, you buy it for them. So if the client puts those requirements in the contract it marginally strengthens your case that they view you as a business and not a disguised employee.

But if you just decide to buy the cover to strengthen your IR35 case, you're wasting your money.

[malvolio]

The place I am insisted on EL and when asked said it was a good pointer for IR35 as I may have to substitute ?

It's an obscure argument, but a supportable one. The assumption is that if you have a viable RoS then you are able to send in another worker (not, note a sub-contractor: they are working under your contract for services); if you send in another worker then you must have EL insurance to cover them. Therefore no EL means you don't immediately have another worker so your RoS is clearly a sham.
It's the kind of thing lawyers love to pick on.

Given it costs very little, it's simply easier to have it anyway, just in case.

[LondonManc]

The place I am insisted on EL and when asked said it was a good pointer for IR35 as I may have to substitute ?

It can be added quickly to your policy but I can see where they are coming from.

[radish2008]

The place I am insisted on EL and when asked said it was a good pointer for IR35 as I may have to substitute ?

[Louisa@AardvarkAccounting]

Got anything useful to post?

Now come on ladies... play nicely on the forum!

[LondonManc]

Got anything useful to post?

Nice new AI mod on it too I see. (Watch him bite)

[northernladuk]

no need to thank him, that's a bot that auto-posts to questions like this.

Got anything useful to post?

[jmo21]

Thanks all, very helpful, I shall get searching when my little snotbag lets me. Sorry northernlad and thanks for the tip, I did attempt some searching, can't believe there's a thread from only a few days ago.

no need to thank him, that's a bot that auto-posts to questions like this.

[TheCyclingProgrammer]

PI is generally a good idea. Public Liability if you ever go on site or have clients visit you (home insurance often has some form of public liability for visitors to your home but they may not cover business visitors). EL is not required in your scenario unless you have employees or supply a worker to the client (but not if you are simply sub-contracting part of the work I don't think).

[Invisiblehand]

Please make sure to check that these insurances aren't included within your accountancy package.

Pretty sure they won't be.

[Becca]

Thanks all, very helpful, I shall get searching when my little snotbag lets me. Sorry northernlad and thanks for the tip, I did attempt some searching, can't believe there's a thread from only a few days ago.