Reply to: Insurance advice

[richclever]

All of that sounds pretty sensible advice. Time to have a word with the accountant about it I think. Last thing I want is any grief with HMRC so thanks all for flagging it up.

[stek]

Because he doesn't care. He knows you can claim for it but it is up to you to make sure it is justified. Your accountant runs a service for you (which you are ultimately reponsible for as you sign it off at the end of the year). He does not run your business for you.

It's not tricky really. She either does enough work to justify the money or she doesn't. You have to be be brutally honest and not kid yourself a bit of accounting (which I bet she never touches again as it takes an hour every month to do mine) really covers a £7k wage. Which it won't. We just don't need that amount of extra effort in most situations.

Wanderer does have a point but we know about MP's wives and the arctic cases because they hit the news and a furor ensued. Do I want to find out I have made a mistake at a tribunal or on the front page of a paper to save a grand or so. No thanks.

I think another newbie and oldbie tenet about being a humble IT contractor and staying under the HMRC radar should be:

1. Don't employ the wife at £7.5k pa for 10 mins a week of entering expenses in a spreadsheet to give to the proper accountant....

[northernladuk]

I do see your point stek but I think we should be able to justify her salary as she will definitely be doing some work even with the accountant dealing with tax affairs etc. I'm sure this is always a tricky subject (and I freely admit I'm completely ignorant of many of the arguments) so it's interesting to hear different peoples takes on it. My accountant certainly thought it was a good idea.

Because he doesn't care. He knows you can claim for it but it is up to you to make sure it is justified. Your accountant runs a service for you (which you are ultimately reponsible for as you sign it off at the end of the year). He does not run your business for you.

It's not tricky really. She either does enough work to justify the money or she doesn't. You have to be be brutally honest and not kid yourself a bit of accounting (which I bet she never touches again as it takes an hour every month to do mine) really covers a £7k wage. Which it won't. We just don't need that amount of extra effort in most situations.

If you are still confused try breaking it down. Be ridiculously generous and pay her £20 an hour. She needs to do 350 hours to make £7k. She will spend 350 hours on your accounts? I don't think so.

The way you have approached it says it all 'Thanks, I've put her down as an employee for tax as she doesn't work at the moment'.. not 'I have put her down because she carries out duties and is a valuable employee'. You are just using her as a tax vehicle not as an employee so you are having to justify your failure and not the otherway around.

Wanderer does have a point but we know about MP's wives and the arctic cases because they hit the news and a furor ensued. Do I want to find out I have made a mistake at a tribunal or on the front page of a paper to save a grand or so. No thanks.

[richclever]

I do see your point stek but I think we should be able to justify her salary as she will definitely be doing some work even with the accountant dealing with tax affairs etc. I'm sure this is always a tricky subject (and I freely admit I'm completely ignorant of many of the arguments) so it's interesting to hear different peoples takes on it. My accountant certainly thought it was a good idea.

[stek]

It's interesting to note that in the Arctic Systems case, the wife was paid around £4,000 per year and this wasn't challenged..

As for the value of the wife's input compared to the market rate, many small business people will find that their spouse has a special status as a company employee in that they are a 50% owner of the company and you simply couldn't entrust their duties to a person off the street. Therefore there is no comparison with a "market rate" for the job done.

Likewise the MPs with wives who pay their wives to work as a "personal assistant" for them....

Do you mind, I'm NLUK's bitch now!

[Wanderer]

I wouldn't do that - red rag to the HMRC bull, if you are paying a professional, high qualified accountant to do your books for around 1200 a year max, how does it look paying 7500 for the ancillary bookkeeping?

It's interesting to note that in the Arctic Systems case, the wife was paid around £4,000 per year and this wasn't challenged..

As for the value of the wife's input compared to the market rate, many small business people will find that their spouse has a special status as a company employee in that they are a 50% owner of the company and you simply couldn't entrust their duties to a person off the street. Therefore there is no comparison with a "market rate" for the job done.

Likewise the MPs with wives who pay their wives to work as a "personal assistant" for them....

[stek]

She certainly will because I'm rubbish at doing it myself! It'll actually be good as she'll learn some new skills for future employment.

I wouldn't do that - red rag to the HMRC bull, if you are paying a professional, high qualified accountant to do your books for around 1200 a year max, how does it look paying 7500 for the ancillary bookkeeping?

Up to you, but I wouldn't want to do anything to attract HMIT....

[richclever]

And what will she be doing for her £7500? Admin I bet!!

She certainly will because I'm rubbish at doing it myself! It'll actually be good as she'll learn some new skills for future employment.

[stek]

Thanks, I've put her down as an employee for tax as she doesn't work at the moment

And what will she be doing for her £7500? Admin I bet!!

[richclever]

Well, that's better than £2500!

I would still get the contract checked if you haven't already though.

My accountant went through the contract but I think that was more for IR35 to be honest.

So many things to getting a contract off the ground!

[Wanderer]

Lol, no not an oil rigger just an IT developer! I think the £10million public liability seems to be problematic. I've had brokers saying it doesn't exist!

The amounts they are asking for are excessive. It's not like you are own your own premises or you are working as a scaffolder or window cleaner where you could clock someone on the head with something dropped from a great height.

Go and tell the agency that their outlandish insurance requirements are a potential a deal breaker or that you will have to increase your rate to cover it. Or ask them to recommend an insurance broker that will give coverage at those levels.

£1 million Professional Indemnity, £10 million Employers Liability and £1 million Public Liability are pretty much the most you should ever need..

Watch that they agency doesn't go asking you to underwrite a personal guarantee against the actions of your LTD company too - that's another stupid trick they are trying these days...

[cojak]

I've just called the client and I might be able to get the public liability level dropped to £5million which means Qdos will do all I need for £393 which sounds a bit more like it! Should hear more this afternoon.

Thanks a lot for the replies so far really appreciated.

Well, that's better than £2500!

I would still get the contract checked if you haven't already though.

[richclever]

I've just called the client and I might be able to get the public liability level dropped to £5million which means Qdos will do all I need for £393 which sounds a bit more like it! Should hear more this afternoon.

Thanks a lot for the replies so far really appreciated.

[cojak]

Hi,

I'm just about to start my first contract and need to get some insurance so could do with some advice because it seems to be a bit of a mine field.

Ltd company is set up, I'm the sole Director and my wife is down as secretary so an employee.

My contract states I need:

£2million Professional liability Insurance
£10million Public Liability Insurance
£10million Employers Liability Insurance

The insurance limit requirements are per claim or connected claims (no idea exactly what that means!)

I've been finding it hard to get quotes and have had one at around £2500 which seems really high.

Does anyone have any ideas on what I should be expecting to pay and any recommendation of who to go to for quotes.

If it makes any difference I will be working on an ecommerce site

Thanks,

You need to push back on this contract - it is definately NOT 'industry standard' for an IT developer to be expected to have £2m/£10m/£10m insurance.

This is for senior management and high risk roles. You should be expected to have £1m/£1m/£1m tops.

I rejected my current contract because of this. They didn't quibble and changed it.

It sounds to me as if you haven't had this contract looked at by QDOS or Bauer & Cottrell - that is something you really need to do to avoid being shafted like this.

[richclever]

Yes, that does sound high. Are you in a high risk occupation like oil rigger or something?

I presume you have done a search for "insurance" on the forum and found a list of the popular insurance providers and tried all of them. What did they say, will they not cover you? Is the amount that you require a problem?

Lol, no not an oil rigger just an IT developer! I think the £10million public liability seems to be problematic. I've had brokers saying it doesn't exist!