IR35 indemnity clause insurance

[eatenrifles]

My issue with it is that it's the principle of the thing. I have recently found myself in the same situation with the smart-arse response from the agent that it's only a few quid to indemnify them. That, combined with IPSE membership (for what little good it is these days), accountancy fees, QDOS insurances and so on, it all adds up. Sure, it may be the cost of just doing business but for me it should be that if clients/agencies are putting in clauses which are contrary to the legislation in passing liability down the contract chain, they should face heavy, and I mean heavy penalties (perhaps a percentage of profits) for putting such clauses in.

Can't disagree with any of that, I'm just figuring that while the market sorts itself out it's better to be outside IR35 even if it costs a bit extra. If it becomes the new norm then the cost of doing business just increased, but compared to the alternative it's a small price to pay.

It will be interesting to see what happens with regard to any legal challenges of these types of clauses in the future.

[ShandyDrinker]

1) Yep, same situation as you: outside SDS and an indemnity clause that attempts to pass the liability to my Ltd.
2) Client has suggested Kingsbridge IR35 Protect.

Not particularly happy about either, but as I see it, if the contract clause can pass liability to myCo then the insurance should protect it. If the contract can't transfer liability then I'm £150 out of pocket for an outside SDS and insurance that might come in handy for something else.

My issue with it is that it's the principle of the thing. I have recently found myself in the same situation with the smart-arse response from the agent that it's only a few quid to indemnify them. That, combined with IPSE membership (for what little good it is these days), accountancy fees, QDOS insurances and so on, it all adds up. Sure, it may be the cost of just doing business but for me it should be that if clients/agencies are putting in clauses which are contrary to the legislation in passing liability down the contract chain, they should face heavy, and I mean heavy penalties (perhaps a percentage of profits) for putting such clauses in.

[eatenrifles]

My first thought is that these clauses are unfair, but if they won't remove them and I could get insurance against the potential costs I might just suck it up. I'm wondering:

1) Are others seeing these kinds of clauses appear in contracts?
2) Has anyone found insurance to cover this kind of thing? Qdos TLC35 insurance I don't believe would (as it's the Client's liability rather than my company's). Kingsbridge seem to offer something that might, though the blurb only mentions covering costs of the fee payer - I'm going to confirm if it also covers costs incurred by the client

1) Yep, same situation as you: outside SDS and an indemnity clause that attempts to pass the liability to my Ltd.
2) Client has suggested Kingsbridge IR35 Protect.

Not particularly happy about either, but as I see it, if the contract clause can pass liability to myCo then the insurance should protect it. If the contract can't transfer liability then I'm £150 out of pocket for an outside SDS and insurance that might come in handy for something else.

[Fred Bloggs]

I really can't imagine a clause in a B2B contract standing up to legal scrutiny when it clearly intends to make a 3rd party responsible for what is already very clear in legislation a client/agency responsibility after April 6th. It's going to take a while for the new IR35 landscape to settle down. But I can't see a clause like this ever being upheld in court.

Having said that, IANAL.

[malvolio]

...

Fair point. I think Qdos provide a contract review ("health check") service, but not legal advice so I suspect they'll inform me my company's liabilities under the contract and leave it at that. Any suggestions for a law firm who might specialise in (or at least be familiar with) IR35 legislation?

Merkel Tax will review the whole thing properly. Discounts for IPSE members.

[almanac]

Is the indemnity clause attempting to move any liability to your Ltd company, or to you personally?

Sorry, I should have been clearer - the agency is asking my Ltd company only to indemnify them and the client (not me personally).

given this is all very new to all of us maybe you should get a legal opinion on it.

Fair point. I think Qdos provide a contract review ("health check") service, but not legal advice so I suspect they'll inform me my company's liabilities under the contract and leave it at that. Any suggestions for a law firm who might specialise in (or at least be familiar with) IR35 legislation?

Don't do that.

:-) agreed.

I'm going to confirm if it also covers costs incurred by the client

Re-reading the Kingsbridge website they provide a policy which should cover "you, your end client, or your recruiter" - I've still to contact them though.

[Lance]

Wanted to discuss a few points around IR35 indemnity clauses in contracts (somewhat related to this thread).

I've previously worked on outside IR35 contracts previously where I was liable for the IR35 risk and took out IR35 insurance to cover any possibility of an HMRC investigation down the line (with Qdos if I recall).

I'd also worked with public sector clients outside IR35 post-April 2018 where they made the determination and accepted IR35 liability.

I'm now looking at a new contract due to start after the April 6th changes this year. The client has issued an outside IR35 SDS however in the contract there are clauses indemnifying the client and agency against any costs associated with investigation and/or penalties owed by the client in case the SDS is challenged by HMRC.

My first thought is that these clauses are unfair, but if they won't remove them and I could get insurance against the potential costs I might just suck it up. I'm wondering:

1) Are others seeing these kinds of clauses appear in contracts?
2) Has anyone found insurance to cover this kind of thing? Qdos TLC35 insurance I don't believe would (as it's the Client's liability rather than my company's). Kingsbridge seem to offer something that might, though the blurb only mentions covering costs of the fee payer - I'm going to confirm if it also covers costs incurred by the client

Thanks.

given this is all very new to all of us maybe you should get a legal opinion on it.
It's generally accepted that a legal liability cannot be transferred if it is trying to outweigh legislation. But we don't know how it's worded, and the legislation hasn't been tested. Too many unknwonws.

IANAL.

Congrats on getting a SDS with an outside determination.
As a point of note, for them to fall foul of HMRC both you, and they need to be stupid, and act like it's inside. Don't do that.

[Paralytic]

Is the indemnity clause attempting to move any liability to your Ltd company, or to you personally?

[almanac]

Wanted to discuss a few points around IR35 indemnity clauses in contracts (somewhat related to this thread).

I've previously worked on outside IR35 contracts previously where I was liable for the IR35 risk and took out IR35 insurance to cover any possibility of an HMRC investigation down the line (with Qdos if I recall).

I'd also worked with public sector clients outside IR35 post-April 2018 where they made the determination and accepted IR35 liability.

I'm now looking at a new contract due to start after the April 6th changes this year. The client has issued an outside IR35 SDS however in the contract there are clauses indemnifying the client and agency against any costs associated with investigation and/or penalties owed by the client in case the SDS is challenged by HMRC.

My first thought is that these clauses are unfair, but if they won't remove them and I could get insurance against the potential costs I might just suck it up. I'm wondering:

1) Are others seeing these kinds of clauses appear in contracts?
2) Has anyone found insurance to cover this kind of thing? Qdos TLC35 insurance I don't believe would (as it's the Client's liability rather than my company's). Kingsbridge seem to offer something that might, though the blurb only mentions covering costs of the fee payer - I'm going to confirm if it also covers costs incurred by the client

Thanks.