Reply to: Company Insurance requirements (IR35)

[swebb]

In my case I was actually working using ParasolIT which was fine but decided eventually that I should go Ltd. When I looked at the egencies contract it was using the PCG template and had the PCG ref and logo on the bottom. They had been using this all along so I should have gone Ltd immediately .... doh

[KevinS]

IME, the bigger the agent, the less willing they are to negotiate.. Smaller agencies tend to be more flexible and if you propose to them that you would be far more comfortable using the PCG contract as it is known to be IR35 friendly, they might go for it..

Keep in mind that is not just YourCo's contract with the agent that will be looked at during an investigation, but the upper contract between the agency and the client as well and if there are serious discrepancies, the upper contract will take precedence (rightly or wrongly)..

[malvolio]

Don't think theere's any hard and fast rule about it. Some people offer them immediately, others only when the agency contract is so bad as to be unusable. There are other complications, though, not least that a lot of agency contracts are aligned to their agreement with the end client (especially on PSL deals), so there is often some difficulty in not using the agency one. Doesn't mean you shouldn't try though.

As written the PCG contracts will all pass IR35 legally so shouldn't need vetting (and if you do get them vetted and they fail, be very suspicious...). Obviously, they need to reflect reality.

[Cheshire Cat]

quick question regarding PCG standard contracts: at what stage do you propose this contract to the agency (assuming you find a contract through an agency)? Is it when you have been offered the contract by the client? Do you then email the agency with a PCG standard contract, with all your bits filled in, and ask them to sign? Or do you wait until the agency send you THEIR contract for your signature and then reject it, proposing yours?
Has anyone had trouble from agents who want to use their own standard contracts?
Does using a PCG contract negate the need for an (expensive) contract review, as presumably the bases are all covered?

[swebb]

If you're using a PCG standard contract and have read the first timer guids and all the rest on their site, then I suggest IR35 is a distant dream...

Follow up question then - why aren't you asking these questions on their fora? The answers you've got from here are right, as it happens, but we're still trying to understand why people don't/won't use the PCG boards, especially for technical issues like these.

To be honest it never crossed my mind, I have used this forum a couple of times and only just joined the PCG so haven't used there forum yet. But now I come to think of it I probably should have !

Cheers

Steve

[malvolio]

Some feedback for you. I find them difficult to use due to the design. This forum is so much cleaner and easier to use. Perhaps a re-design would encourage more users. No problem with content.

Aaarrghhh!!! We just had one. Took a lot of effort from the IT team becuase the overwhelming majority wanted it to stay just like the old one.

Main reason was everyone liked the threaded mode for some of the longer debates, which just wouldn't work on the way this board is laid out - although we seem to manage, probably beciase wee're used to it. Had we gone with this style over there, I have no doubt people would have soon adapted though!

[Lewis]

we're still trying to understand why people don't/won't use the PCG boards, especially for technical issues like these.

Some feedback for you. I find them difficult to use due to the design. This forum is so much cleaner and easier to use. Perhaps a re-design would encourage more users. No problem with content.

[malvolio]

Hi Malvolio and Gonzo,

Thanks again for the replies.

I started up the company through PCG so I'm gradually going though all their bumph as well as the web site. As you say £75 is cheap ! I'll probably get it anyway at that price.

My contract actually follows the PCG template and the agency I'm currently using seem to keep upto date with the PCG info which is good.

Cheers

Steve

If you're using a PCG standard contract and have read the first timer guids and all the rest on their site, then I suggest IR35 is a distant dream...

Follow up question then - why aren't you asking these questions on their fora? The answers you've got from here are right, as it happens, but we're still trying to understand why people don't/won't use the PCG boards, especially for technical issues like these.

[swebb]

Hi Malvolio and Gonzo,

Thanks again for the replies.

I started up the company through PCG so I'm gradually going though all their bumph as well as the web site. As you say £75 is cheap ! I'll probably get it anyway at that price.

My contract actually follows the PCG template and the agency I'm currently using seem to keep upto date with the PCG info which is good.

Cheers

Steve

[Gonzo]

Thanks for the reply SueEllen. I did follow the link that Gonzo included and on that page it said

"As a freelance consultant or contractor operating outside IR35, however, you are likely to have a substitution clause in your contracts. Without employers’ liability insurance, you cannot fulfil this clause without breaking the law, so in practice you ought to have cover."

As you mentioned you don't actually need the insurance until you have an employee but I'm not sure they would see it that way during an investigation, its strikes me as a grey area.

Like you say I need to read up on a few cases I think and also see how the insurance stands concerning subcontractors. I would have thought that using a subscontractor makes little difference to insurance however as my company would be supplying them to the client but I need to confirm this (more reading).

Sorry if these are anoyying questions but i've only just started the company and have a million and one things to read up on and I thought the forum would be a good place to ask questions about one or two of the grey (ambiguous) areas.

Cheers

Steve

Don't worry, these are targeted questions which is what we like to see.

On the point of having employers liability insurance to help show that you are outside of IR35, I don't think it is going to make any difference.

People have raised the "how could the substitution clause in the contract be anything other than a sham without it" question before, and we end up going around in circles because another contractor could be supplied, not an employee of yourCo.

Contracts and working practices are what you need to get right.

[malvolio]

If you get bundled PI/ELI/PLI insurance, as for example through Randell Dorling, the cost of the ELI element is insignficant anyway. For the sake of no more than £75 a year you are covering the business risk that you may have to offer a subbie (which is a Very Good Thing...) but not be allowed to do so for the sake of an arcane bit of legislation. The cost is trivial so just do it.

Insurances make the company legal and better protected, but Hector will take no notice at all: his view is that the whole corporate element is a sham anyway.

Do not run your business in terms of IR35, though, that would be pointless. The rule to remeber is "do not allow the taxpaying tail to wag the fee-earning dog".

Finally, yes you do need to read up, you need to join the PCG (seriously, you do) and pick their collective brains, and you need to learn. But at least you're asking focused questions, unlike some...

[swebb]

Thanks for the reply SueEllen. I did follow the link that Gonzo included and on that page it said

"As a freelance consultant or contractor operating outside IR35, however, you are likely to have a substitution clause in your contracts. Without employers’ liability insurance, you cannot fulfil this clause without breaking the law, so in practice you ought to have cover."

As you mentioned you don't actually need the insurance until you have an employee but I'm not sure they would see it that way during an investigation, its strikes me as a grey area.

Like you say I need to read up on a few cases I think and also see how the insurance stands concerning subcontractors. I would have thought that using a subscontractor makes little difference to insurance however as my company would be supplying them to the client but I need to confirm this (more reading).

Sorry if these are anoyying questions but i've only just started the company and have a million and one things to read up on and I thought the forum would be a good place to ask questions about one or two of the grey (ambiguous) areas.

Cheers

Steve

[SueEllen]

The revenue is not interested in your insurances or how you advertise your company. They are interested in your individual working practises.

If you use the search button you will find links to other threads on IR35 which contain links to legal cases. (I'm not doing this for you as it isn't hard. If I managed to search for and find the links then it can't be the holy grail.)

Employers liability insurance is not needed if you don't have any employees apart from yourself. If and when you do use your substitution clause and get an employee not a subcontractor, then you will have to ensure you have the insurance in place.

Gonzo has already pointed you to useful links so I suggest you read them properly.

[swebb]

Thanks for the reply Gonzo.

I was actually more concerned that having the insurance would help during an IR35 investigation to imply I was actually running as a company and not an employee.

I realize that the liability insurance is no longer required however surely if my contract has a substitution clause then my company is not a one man band and must have employees liability. Well that's they way I understood it anyway. If I don't have the insurance and get investigated couldn't the revenue us this against me and argue I was an employee ?

As I say this is all new to me so I might be adding 1+1 and making 3

Cheers

Steve

[Gonzo]

Hi there,

Just need some info about insurance for a company I have just started via the PCG. I'm trying to cover myself against IR35. I've checked my contract for IR35 (its actually using the PCG A06-05 template) but I'm a little confused about the impact company insurance has with regards to this. Am I right in thinking that having both employers and public liability insurance is there way to go ? I notice on this site that this can be obtained for £112pa, is this a good deal ?

Any other tips on other insurance that should be considered.

Sorry for the questions as I'm still a novice at the director game and I'm currently sitting to the left of so many documents that need reading I feel like I've just stumbled into a legal minefield

Cheers

Steve

What IR35 risk are you intending to insure? -

A. The professional fees you will need to incur if you are investigated, or
B. The additional tax that you have to pay if you are judged to be inside?

Employers and public liability insurance will not help with either of those. They used to be compulsory, but I think that Employer's liability cover is no longer necessary if you do not have any employees.

PCG membership will help with A, although I do have additional cover of my own in the event of any legal dispute.

B you will need to go to someone like QDOS consulting*. There are many (including myself) that would argue that this cover is a waste of money, although others would argue that it helps them sleep at night.

There is some useful info here:

http://www.pcg.org.uk/cms/index.php?...915&Itemid=391

Usual disclaimer - I am not a Lawyer or and Accountant.

*Other tax insurance schemes may be available.