Business Insurance cover

[CatOnMat]

We have the TLC35 Insurance with Qdos, which covers both - legal costs associated with defending an HMRC IR35 enquiry, as well as, tax loss in the event of HMRC successfully challenging our IR35 status.

So, in light of your above comment about "nature of the policy", will that TLC35 Insurance with Qdos be an allowable Business expense or not, in your viewpoint?

Hi Costa, my experience tallies with the comment from Alchemy - I had a similar query ages back and got the following explanation from my accountant which does make sense in terms of not being wholly & exclusively a business thing given the element of personal protection in my TLC35 policy at the time:


The reason why your TLC35 policy doesn’t receive Corporation Tax relief is because the protection is for personal taxes, therefore this makes it a benefit for the company director (you). So whilst you’re able to purchase this through your business’ profits, the portion of the insurance expense which relates to TLC35 doesn’t receive Corporation Tax relief as there is a personal element to the expense.

[Alchemy Accountancy]

We have the TLC35 Insurance with Qdos, which covers both - legal costs associated with defending an HMRC IR35 enquiry, as well as, tax loss in the event of HMRC successfully challenging our IR35 status.

So, in light of your above comment about "nature of the policy", will that TLC35 Insurance with Qdos be an allowable Business expense or not, in your viewpoint?

I would agree with your accountant and would disallow a TLC35 policy for Corporation Tax purposes.

To be clear, this doesn't mean that I'd ask you to repay it to the company (as you would a personal expense), it simply means that it is added back to the trading profit for the purpose of calculating Corporation Tax (and therefore you would not get 'relief' on the value of this expense) - you would still be able to pay it from the company so it would not be coming from your own pocket (i.e. after you have paid dividend tax).

Hope this gives you some reassurance!

[Costa]

We have the TLC35 Insurance with Qdos, which covers both - legal costs associated with defending an HMRC IR35 enquiry, as well as, tax loss in the event of HMRC successfully challenging our IR35 status.

So, in light of your above comment about "nature of the policy", will that TLC35 Insurance with Qdos be an allowable Business expense or not, in your viewpoint?

[Alchemy Accountancy]

Hi All,

May be not directly relevant to the original question in this thread, but had a quick query about IR35 Insurance, so thought will ask here. (Posted in another thread too, an reposting here, to increase the visibility / responses )

We have taken IR35 Insurance from Qdos. It is on the company name, and we pay through Limited Company business bank account. Is that cost an allowable Limited Company expense or not? Are there any relevant links / articles from any tax experts that I can read to confirm this?

(Background is that we thought it will be an allowable Limited Company expense, but our accountant doesn't agree. So trying to find out what other accountants / tax experts say.)

Thanks in advance.

The answer is that it depends on the nature of the policy...

If the policy is to cover the additional accountancy and legal costs associated with defending an HMRC enquiry, then it would be allowable as a deductible expense for CT purposes.

If the policy covered the tax loss in the event of HMRC successfully challenging your IR35 status, then it would not be allowable as a CT deduction.

I understand that Qdos offer both types of cover.

[malvolio]

Thanks guys. I thought the same.

Just for my info - Do you happen to have a link to any article which discusses this point about IR35 insurance specifically? (Will help in my discussion with the accountant)

Thanks.

You're missing a major point here. Your accountant advises (badly in this case). What actually happens is your decision. Tell him you will treat it as a business cost. If he disagrees, well there are plenty that understand it properly.

[Lance]

Thanks guys. I thought the same.

Just for my info - Do you happen to have a link to any article which discusses this point about IR35 insurance specifically? (Will help in my discussion with the accountant)

Thanks.

no. There's just no reason.
Even health insurance is a business expense. Just one that goes on a P11d and tax is paid by the recipient.

[Costa]

Thanks guys. I thought the same.

Just for my info - Do you happen to have a link to any article which discusses this point about IR35 insurance specifically? (Will help in my discussion with the accountant)

Thanks.

[edison]

Hi All,

May be not directly relevant to the original question in this thread, but had a quick query about IR35 Insurance, so thought will ask here. (Posted in another thread too, an reposting here, to increase the visibility / responses )

We have taken IR35 Insurance from Qdos. It is on the company name, and we pay through Limited Company business bank account. Is that cost an allowable Limited Company expense or not? Are there any relevant links / articles from any tax experts that I can read to confirm this?

(Background is that we thought it will be an allowable Limited Company expense, but our accountant doesn't agree. So trying to find out what other accountants / tax experts say.)

Thanks in advance.

I'd be a bit concerned if my accountant gave me that advice and would be looking for a new one unless they came up with some sound logic on their advice.

[malvolio]

Hi All,

May be not directly relevant to the original question in this thread, but had a quick query about IR35 Insurance, so thought will ask here. (Posted in another thread too, an reposting here, to increase the visibility / responses )

We have taken IR35 Insurance from Qdos. It is on the company name, and we pay through Limited Company business bank account. Is that cost an allowable Limited Company expense or not? Are there any relevant links / articles from any tax experts that I can read to confirm this?

(Background is that we thought it will be an allowable Limited Company expense, but our accountant doesn't agree. So trying to find out what other accountants / tax experts say.)

Thanks in advance.

The test is "wholly and exclusively". The argument (long ago determined by IPSE about their own membership fee but generally applicable) is that you wouldn't need the insurance if you didn't have the company, so clearly it passes that easily.

I would ask your accountant for a detailed answer as to why they think differently. I wouldn't trust an accountant who doesn't seem to have got their head around the differences between a Ltd Co, a sole trader, a worker and an employee...

[Costa]

Hi All,

May be not directly relevant to the original question in this thread, but had a quick query about IR35 Insurance, so thought will ask here. (Posted in another thread too, an reposting here, to increase the visibility / responses )

We have taken IR35 Insurance from Qdos. It is on the company name, and we pay through Limited Company business bank account. Is that cost an allowable Limited Company expense or not? Are there any relevant links / articles from any tax experts that I can read to confirm this?

(Background is that we thought it will be an allowable Limited Company expense, but our accountant doesn't agree. So trying to find out what other accountants / tax experts say.)

Thanks in advance.

[northernladuk]

Bloody permies coming over here and stealing our jobs.

[Protagoras]

Legal protection £100,000 (I assume this to mean D&O cover)
Crisis containment £25,000 (I assume this to mean - if my mistake went public and i ended up on TV this would cover for PR etc.)

I'd want to be sure about what is meant by these terms rather than assume anything.

- Would you say these limits are usual and reasonable?

Yes

- If this is normal should I be looking at any other cover and add-ons to play it safe? e.g. IR35 insurance?

Presumably, given the nature of the projects, your clients are 'large' in which case off-payroll status is a matter for client determination. Just beware of off-payroll 'indemnity clauses' ... there are lots of posts on here about these.

However, if your LtdCo is responsible for IR35 status then it would be prudent to have professional assistance with determination and have insurance cover in place for legal costs.

[ladymuck]

Technically, unless you do actually have employees, you don't need EL cover. However, getting that concept across for the sake of saving a few quid is a challenge.

I use Caunce O'Hara (no ladymuck specials available). I have all of those except crisis containment and pay <£500 a year.

To further answer your question. The limits are reasonable and common.

The thing about IR35 insurance is that you can only get it if the insurer (like Qdos) thinks the likelihood of a claim is minimal, which tells you how much it's worth really...

[Andy Hallett]

That seems high. I pay less with Kingsbridge, if they don't beat that ask for the Andy Hallett deal!

[polarbearuk75]

Hi

I am an IT contractor (with a new Ltd company) in the enterprise / financial services sector mostly doing advisory / digital transformation / project management. I am not coding / or providing hardware etc. Just advising clients etc on what and how to do it. My project could be up to £1m. My Ltd company maybe turning over up to £200k max.

I am fairly new to contracting, having moved from permanent. I am about to start a new outside IR35 contract/consulting with a very old contact. The contract I am about to sign has stated the following insurance limits for my Ltd company.

Professional indemnity £2,000,000
Public and products liability £2,000,000
Employers’ liability £10,000,000
Legal protection £100,000 (I assume this to mean D&O cover)
Crisis containment £25,000 (I assume this to mean - if my mistake went public and i ended up on TV this would cover for PR etc.)

A couple of questions

- Would you say these limits are usual and reasonable? As I have had some quotes back which start at £800+ a year.
- Any suggestions for good brokers?
- If this is normal should I be looking at any other cover and add-ons to play it safe? e.g. IR35 insurance?

Many thanks for any advice.