Reply to: QDOS IR35 Cover?

[Qdos Contractor]

And as if by magic, the shopkeeper appears.

I can't recall what the survey questions were. And I can't see them on the qdos website without re-registering. But I think they were just checking that you didn't start working for a company as a contractor that you had just left as permie. i.e. a basic check.

These are the current statements:

- You have not been subject to a VAT, PAYE or NIC inspection and/or an HMRC enquiry into your self-assessment tax return (personal and/or corporate) in the last three years.
- You are able to exercise a Right of Substitution (A Right of Substitution allows you to provide suitable substitute personnel to carry out the services for your company if you are unable to do so personally. Your client may retain the right to reject a substitute on reasonable grounds relating to their suitability to provide the services required. Your company must also remain responsible for payment of any substitute. Whilst it must exist in practice, you are under no obligation to exercise this right.)
- You have autonomy over your method of work and are not subject to the same level of supervision or control as your clients’ employees.
- Your company currently carries, or you will look to purchase business insurances, such as Professional Indemnity, Employers/Public Liability.
- You are not aware of any discrepancies between your company’s contract with your agency and your agency’s contract with your end client.
- You have not been employed by any of your current clients on a PAYE basis in the last 12 months.

[SueEllen]

I have insurance through Qdos, and they never did any review.

I have to say in my case I am reasonably confident I am outside IR35, but the point I am discussing is that according to the terms of the QDOS insurance and my own experience signing up to it there is no requirement to show diligence or state an opinion or anything. So I could have legitimately got the insurance even if I'd been slam dunk caught.

I suppose the catch is the the insurance would pay out fines and penalties imposed by the court. But money on its own cannot compensate for time spent in prison.

Insurers are allowed to cancel policies and give you a refund for it if there is a chance you brought it by "accident" and they wouldn't have insured you knowing the full facts of your circumstances. Often these mistakes are only uncovered when a claim arises.

[KentPhilip]

Hmm...where to start?

I think the most important thing to point out is that there is a 'statement of fact' that you complete when you buy the TLC35 (full IR35 insurance) policy. This just covers the key IR35 areas, asking whether (to the best of your knowledge) they are correct.

I explained it quite a bit in this thread here.

Let me know if there are any questions.

And as if by magic, the shopkeeper appears.

I can't recall what the survey questions were. And I can't see them on the qdos website without re-registering. But I think they were just checking that you didn't start working for a company as a contractor that you had just left as permie. i.e. a basic check.

[Qdos Contractor]

Hmm...where to start?

I think the most important thing to point out is that there is a 'statement of fact' that you complete when you buy the TLC35 (full IR35 insurance) policy. This just covers the key IR35 areas, asking whether (to the best of your knowledge) they are correct.

I explained it quite a bit in this thread here.

Let me know if there are any questions.

[LisaContractorUmbrella]

I have insurance through Qdos, and they never did any review.

I have to say in my case I am reasonably confident I am outside IR35, but the point I am discussing is that according to the terms of the QDOS insurance and my own experience signing up to it there is no requirement to show diligence or state an opinion or anything. So I could have legitimately got the insurance even if I'd been slam dunk caught.

I suppose the catch is the the insurance would pay out fines and penalties imposed by the court. But money on its own cannot compensate for time spent in prison.

There is a QDOS person who posts here sometimes. Perhaps their input would be beneficial?

Just out of interest what makes you think you are outside?

[KentPhilip]

You won't get insurance without having the review done anyway.

I have insurance through Qdos, and they never did any review.

I have to say in my case I am reasonably confident I am outside IR35, but the point I am discussing is that according to the terms of the QDOS insurance and my own experience signing up to it there is no requirement to show diligence or state an opinion or anything. So I could have legitimately got the insurance even if I'd been slam dunk caught.

I suppose the catch is the the insurance would pay out fines and penalties imposed by the court. But money on its own cannot compensate for time spent in prison.

There is a QDOS person who posts here sometimes. Perhaps their input would be beneficial?

[DaveB]

OK well I stand corrected - perhaps there are some cases when a contractor can be certain they are caught.

But what about if the contractor thinks they are probably caught, but are not certain they are caught. If they choose to declare themselves outside of IR35 and cover themselves using insurance, are they guilty of tax evasion? I don't think they can be, because they have not had sufficient intention to break the law. i.e. they would only be punished with fines and penalties etc.

If this is not the case, then taking things to their logical conclusion, a contractor who is only 99% certain they are outside the legislation could be jailed for tax evasion because they have some uncertainty.

Then get a contract review done and get a professional opinion. That shows due dilligance and that you have based your decision on facts rather than supposition.

You won't get insurance without having the review done anyway.

[malvolio]

OK well I stand corrected - perhaps there are some cases when a contractor can be certain they are caught.

But what about if the contractor thinks they are probably caught, but are not certain they are caught. If they choose to declare themselves outside of IR35 and cover themselves using insurance, are they guilty of tax evasion? I don't think they can be, because they have not had sufficient intention to break the law. i.e. they would only be punished with fines and penalties etc.

If this is not the case, then taking things to their logical conclusion, a contractor who is only 99% certain they are outside the legislation could be jailed for tax evasion because they have some uncertainty.

Hey, nobody said IR35 was clear cut. The borderline cases are actually recognised as such, which is why nobody who's lost an appeal has been penalised, only the missing tax and interest has been reclaimed.

But the problem is knowing - or having a reasonable certainty - that you are caught by IR35 or having evidence from a review process of some kind to point you to being inside and still pretending to be outside. You will have to prove due diligence to avoid penalties and if HMRC decide you then ignored the results they may well turn nasty.

Plus, of course, nobody will give you tax protection cover unless they believe themselves that you are not caught. Which rather blows the whole idea.

[KentPhilip]

Nope sorry don't agree - there are some circumstances when IR35 status is quite clear cut according to the terms of the original legislation and the case law that has subsequently arisen from it - to declare your self outside when you were quite clearly inside would be knowingly underpaying tax

OK well I stand corrected - perhaps there are some cases when a contractor can be certain they are caught.

But what about if the contractor thinks they are probably caught, but are not certain they are caught. If they choose to declare themselves outside of IR35 and cover themselves using insurance, are they guilty of tax evasion? I don't think they can be, because they have not had sufficient intention to break the law. i.e. they would only be punished with fines and penalties etc.

If this is not the case, then taking things to their logical conclusion, a contractor who is only 99% certain they are outside the legislation could be jailed for tax evasion because they have some uncertainty.

[psychocandy]

I think what it does not cover is when you are already under investigation by them.

r

LOL. Thats a deffo.

Be like crashing your motor and saying can I have insurance please and BTW, can you shell out £10K for repairs pls.

[LisaContractorUmbrella]

I would agree with you if that scenario on its own proved that you were inside IR35, but as we all know it is the totality of the situation that matters (right to substitution etc). There are some situations where you would be outside IR35. Since they cannot prove that the contractor should have been certain that he was within IR35, they cannot establish an intent, beyond reasonable doubt, to evade tax by declaring themselves outside of it. Hence there can be no criminal tax evasion conviction.

People are only convicted when they do things that are provably wrong, such as failing to declare income at all etc.

Nope sorry don't agree - there are some circumstances when IR35 status is quite clear cut according to the terms of the original legislation and the case law that has subsequently arisen from it - to declare your self outside when you were quite clearly inside would be knowingly underpaying tax

[KentPhilip]

Hmmm no.

If I worked as a permie for Company X then took redundancy and came back as a contractor two months later doing the same job I would be clearly within IR35.

I would agree with you if that scenario on its own proved that you were inside IR35, but as we all know it is the totality of the situation that matters (right to substitution etc). There are some situations where you would be outside IR35. Since they cannot prove that the contractor should have been certain that he was within IR35, they cannot establish an intent, beyond reasonable doubt, to evade tax by declaring themselves outside of it. Hence there can be no criminal tax evasion conviction.

People are only convicted when they do things that are provably wrong, such as failing to declare income at all etc.

[SueEllen]

If you get caught by IR35 you haven't done anything illegal. Unless you deliberately try to falsify information provided to the revenue (in which case you might be jailed for fraud or tax evasion). This is because IR35 status is always only an opinion - they can't prove you have made a materially false statement that you are out when you are actually in, because there's nothing concrete in the rules.
Insurance is there to protect you from any number of things, including action by the state, so I don't see a problem using insurance to eliminate the risk of IR35.

Hmmm no.

If I worked as a permie for Company X then took redundancy and came back as a contractor two months later doing the same job I would be clearly within IR35.

This kind of scenario was what the law was originally intended for.

[malvolio]

If you get caught by IR35 you haven't done anything illegal. Unless you deliberately try to falsify information provided to the revenue (in which case you might be jailed for fraud or tax evasion). This is because IR35 status is always only an opinion - they can't prove you have made a materially false statement that you are out when you are actually in, because there's nothing concrete in the rules.
Insurance is there to protect you from any number of things, including action by the state, so I don't see a problem using insurance to eliminate the risk of IR35.

Yebbut it's still a law: if you are deemed to be a disguised employee then you have to pay this amount of taxes on your gross. Not doing so while knowing that the law applies to your contract (as per" if you are blatently IR35 caught, you can still use QDOS cover to protect yourself and not pay IR35. ") is evasion.

I'm not biased either. My position has always been that you should know the rules, do the best you can to put yourself outside IR35 and have good representation if you need it: I don't care where it comes from but IMVHO the PCG Plus deal is commercially the best option: you may disagree but you would struggle to justify it on a cost basis.

However, penalties and tax payment cover is simply a waste of money. Again, IMVHO

[KentPhilip]

So what you are saying is you want to buy insurance to pay off an illegal activity if you get caught...

If you get caught by IR35 you haven't done anything illegal. Unless you deliberately try to falsify information provided to the revenue (in which case you might be jailed for fraud or tax evasion). This is because IR35 status is always only an opinion - they can't prove you have made a materially false statement that you are out when you are actually in, because there's nothing concrete in the rules.
Insurance is there to protect you from any number of things, including action by the state, so I don't see a problem using insurance to eliminate the risk of IR35.