Reply to: QDOS IR35 insurance

[Batcher]

Had an illuminating chat with QDOS about this today as I've started to consider TLC35 so I can safely pursue the more IR35 risky contracts: They said that once your company is successfully closed HMRC are very unlikely to reopen it as there's a lot of hassle and expense involved - they'd only likely bother if they stood to make serious £££ as a result.

Back in the early 2000s I was subject to an IR35 investigation. I had TLC35 with QDOS (or it's equivalent at the time) and was a member of the PCG.

During that time (4 years) I had a few people at QDOS on my case but they seemed to change every few months and I eventually had Seb Maley representing me. It came to the point that HMRC claimed I owed them £52k so I wanted to go to the commissioners for appeal. QDOS said my cover didn't include this, they would still represent me but I would need to pay the £7k cost myself.

I was under the impression that any win at the commissioners would be good news for contractors and that QDOS would get more people buying TLC35 because of the publicity but they refused to budge.

I then contacted the PCG legal department (I should have done this first!!) and once they were involved it didn't take long for them to shoot HMRC's case down. No need for the commissioners as HMRC dropped the case and didn't even pursue the expenses and other things they said I had misclaimed during the investigation.

Needless to say I didn't take up renewal of TLC35 and am happy to pay into the IPSE pot to help others, at least until next April when the game changes again.

[psychocandy]

Had an illuminating chat with QDOS about this today as I've started to consider TLC35 so I can safely pursue the more IR35 risky contracts: They said that once your company is successfully closed HMRC are very unlikely to reopen it as there's a lot of hassle and expense involved - they'd only likely bother if they stood to make serious £££ as a result.

Contracting without any sort of cover be it IPSE or QDOS is IMHO insanity...

These are life changing amounts we're talking here that HMRC could come chasing you for. I wouldn't want to be without professional representation....

[man]

Totally forgotten I'd commented on this thread.

I'm in that position now. 18 months since last outside IR35 gig (umbrella since then) and I closed limited down year ago.
I did pay for TLC35 up until now with QDOS.

I know HMRC can go back more than a year but chances now? £200 is £200 after all...

Had an illuminating chat with QDOS about this today as I've started to consider TLC35 so I can safely pursue the more IR35 risky contracts: They said that once your company is successfully closed HMRC are very unlikely to reopen it as there's a lot of hassle and expense involved - they'd only likely bother if they stood to make serious £££ as a result.

[psychocandy]

Totally forgotten I'd commented on this thread.

I'm in that position now. 18 months since last outside IR35 gig (umbrella since then) and I closed limited down year ago.
I did pay for TLC35 up until now with QDOS.

I know HMRC can go back more than a year but chances now? £200 is £200 after all...

[northernladuk]

Joking aside, then, so long as you didn't claim ER or anything would it not be prudent to close down our Ltd Co's every few years and start a new one - wouldn't that seriously mitigate risk?

It would seriously increase HMRC's interest in you and your carry on's I would have thought. If you run your business properly, you are outside and you run your tax affairs properly I'd guess you will be putting yourself at more risk regularly closing the company than not.

There are no articles giving a definitive answer but noteable ones from Kate Cottrell and one from CW linked below both mention the possibility of investigations.

https://www.contractoruk.com/ir35/co...ding_4706.html


I don't think I'd be doing it if it was just to avoid investigations personally. I'd be willing to bet that's the same advice most accountants would give you as well.

[vwdan]

When you close the company it goes through extra scrutiny so there is a chance they'll pick it up for extra checks sometime in the next 12 months after submitting final paperwork.

Joking aside, then, so long as you didn't claim ER or anything would it not be prudent to close down our Ltd Co's every few years and start a new one - wouldn't that seriously mitigate risk?

[northernladuk]

When you close the company it goes through extra scrutiny so there is a chance they'll pick it up for extra checks sometime in the next 12 months after submitting final paperwork.

[psychocandy]

The decision is how long to keep the insurance product current. HMRC can go back a lot further than 12 months. My advice is so long as your limited co exists, you need to maintain cover since HMRC could open an investigation at any time. Once your company has ceased trading and been closed, keep you cover for at least 12 months, potentially 2 years for piece of mind.

Isn;t it 6 years they can go back?

Why does closing company make a difference? You seem to be implying that if you close ltd then you're ok after a year or two....

[Scruff]

My personal take on this is to maintain PLI & PL for as long as I am in contract.

I have both the IPSE+ as well as QDOS TLC35 (uninterrupted) cover, even though my risk profile is low (I have every contract assessed for IR35 compliance, over and above the Working Practices and the Schedule of Work). I do not accept any contracts unless they are a "PASS".

You pays your money, you makes your choice.

[Qdos Contractor]

Hi,

I'm new to contracting, started in October on a 6-month contract, and it's been extended WEF next week to end of September. QDOS do provide my public liability insurance.

What I don't understand is the time period IR35 insurance covers.. does it back-date to October, when I started contracting?

What happens once my contract ends? I have a small child so may go back to not working until she is older... do I need to maintain a current IR35 policy indefinitely to cover me should HMRC suddenly decide to investigate me in the future?

Or what if I go back to PAYE employment? Again, do I have to maintain a current policy just in case?

Many thanks!

Hi SmartieDriver - The TLC does cover retrospectively to any contract, providing the application statements apply. Whilst your public liability policy needs to be in place at the time of the incident that gives rise to a claim and can be claimed any time thereafter, the TLC policy works differently and must be in place at the time the claim is made/you receive the letter from HMRC. You can find more information around how each policy works here (which also has a section on your query): https://www.qdoscontractor.com/insur...olicy-renewals

We can't advise you whether to maintain your policy, however, when our customers are winding down their companies, many of them begin to simply reduce their TLC cover as their risk of enquiry lessens, where it is possible, to reduce their costs. HMRC can enquire into your accounts when you are not working, so for as long as your company is open, it may be worth considering maintaining cover. If you have any concerns, do just give us a call - our consultants will be more than happy to help.

-Gemma

[PerfectStorm]

You need to study your history...

Ah - what did I miss in that case?

[malvolio]

Is there some connection between you and IPSE other than being a customer? You seem to like them a lot

You need to study your history...

However, IPSE's offering is a very sound and wide-ranging commercial proposition that too many newbie contractors know nothing about. It's up to them if they buy or not, but they need to be aware of it.

[malvolio]

The IPSE cover doesn't seem to mention anything about covering a tax liability if HMRC should decide I fall inside IR35?

No it doesn't. However it is available through them at much the same cost as the QDOS version. Plus the underlying cover from being a member is much wider ranging.

I won't restart the debate about whether or not you actually need tax charge protection though. Since the change to the PS rules, and any future changes to the private sector equivalents, that is a whole lot more difficult to decide.

[SmartieDriver]

PI and PLI is needed when the case is raised that requires it, so backdating it isn't really an issue. It offers legal support, primarily, to try to head off the case.

As regards longer term support for a variable career, perhaps basic IPSE membership to cover any tax-related inquiries is another option?

The IPSE cover doesn't seem to mention anything about covering a tax liability if HMRC should decide I fall inside IR35?

[SmartieDriver]

Thanks, that makes a lot of sense.