Reply to: IR35 insurance - worth buying at this stage in my situation?

[mrrossi]

Thanks everyone for your input... yes I wasn't 100% on the cover that IPSE offered, seems there's a few discussions around that. In the end I've taken out the QDOS insurance.

Just waiting now until the end of January when my client should make a decision on what they are going to do...

[Hamlet]

It's definitely still worth purchasing IR35 insurance for a piece of mind. I just did it and QDOS confirmed the policy covers retroactive investigations for previous contracts and tax years. You can keep the policy even after down closing your Ltd and conveniently pay from company money up to one year upfront.

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Last time I checked, admittedly a while ago, the tax cover had a condition around the working practices reflecting the contract. But if your working practices really do reflect your contract then you have little to fear from an investigation, assuming your legal costs are covered. If they don't, then the insurance may not pay out.

So it is (or was) really just covering the contract reviewer's interpretation of case law, and not the (likely bigger) risk of a client saying something unhelpful about your working practices.

[simes]

But who knows, HMRC do seem to like fighting losing cases and then losing appeals...

Indeed they've made a career of it...

[FIERCE TANK BATTLE]

I've had IR35 insurance since day one, considering the trivial cost of a few hundred quid it's a no brainer.

Remember, you can get investigated even if you're totally legit and do all the right things and it becomes a giant pain to deal with.

I remember reading a story about a guy where HMRC demanded he attend their offices, that'd be a day's lost pay + wages, he had IR35 insurance (qdos I think) and set the dogs on them, and they caved and instead just agreed to ask him a few questions over the phone and it was done & dusted.

I imagine you can head a lot of it off at the pass by just telling them you have qdos insurance because they'll probably give up there and then, not worth the fight when you can find some poor shmuck who can't defend himself. But who knows, HMRC do seem to like fighting losing cases and then losing appeals...

[Syd]

Is this insurance covering the NI liability or just insurance to provide expertise in the case of any investigation ?

Their website says:

Full IR35 insurance, covering representation costs in dealing with HMRC plus additional tax, NIC, interest and penalties arising from an IR35 enquiry.

You can choose from £25k, £50k, £75k or £100k levels of indemnity as required in the 'Questions' section of the purchase process.

[rootsnall]

Indeed it will if you have met the criteria

You did get your last contract reviewed for example didn’t you? Or did you just sigh it like the majority?

Sighed a few times and then read the contract to check it had the key points in there. IPSE isn't insurance, the membership will provide you with 'Tax Investigation Costs' which I assume is some expert guidance in the case of an investigation. For me it's just making sure I don't do anything stupid if they come a knocking. If they tell me I'm stuffed then so be it, it's better than guessing.

[jamesbrown]

Isn't this required to get insurance in the first place?

It depends what you mean by insurance. IPSE don't offer insurance. They cover you for the professional fees associated with tax investigations (not just IR35) and they insure themselves. Other companies offer tax loss insurance to the PSC (it's a company liability), some of which are based on IPSE membership (to cover professional fees). As to whether a review is required, it varies. Afterall, the unconditional probability of an HMRC win is quite low; a successful review will reduce that further. Hence the change in tack from HMRC to push more contracts away from PSCs or to de facto inside, even if they could be cast outside quite easily were the clients not fearful.

[dsc]

You did get your last contract reviewed for example didn’t you?

Isn't this required to get insurance in the first place?

[GhostofTarbera]

mrrossi - I have joined IPSE, this just covers the cost of any investigation

Indeed it will if you have met the criteria

You did get your last contract reviewed for example didn’t you? Or did you just sigh it like the majority?


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[rootsnall]

It's definitely still worth purchasing IR35 insurance for a piece of mind. I just did it and QDOS confirmed the policy covers retroactive investigations for previous contracts and tax years. You can keep the policy even after down closing your Ltd and conveniently pay from company money up to one year upfront.

Sent from my SM-G935F using Contractor UK Forum mobile app

Is this insurance covering the NI liability or just insurance to provide expertise in the case of any investigation ?

mrrossi - I have joined IPSE, this just covers the cost of any investigation

[Syd]

It's definitely still worth purchasing IR35 insurance for a piece of mind. I just did it and QDOS confirmed the policy covers retroactive investigations for previous contracts and tax years. You can keep the policy even after down closing your Ltd and conveniently pay from company money up to one year upfront.

Sent from my SM-G935F using Contractor UK Forum mobile app

[dsc]

Brolly might be a different risk, but PAYE is still a big risk imho, especially if you stay in the same dept, doing the same thing. On the other hand no one really knows, but if all that changes is the way you are engaged, then I think HMRC might have an easy target.

[mrrossi]

Takes which route? The individual assessments or umbrella / PAYE? The latter means at least 30% less money via umbrella assuming they keep your rate the same or depending on your skillset and industry an even bigger cut when moving to PAYE. There's also the risk of moving from PSC to umbrella / PAYE with the same company, which can be seen by HMRC as admitting that you've always been an employee.

As for owed-tax insurance I doubt you'll get cover for past years as then anyone could just roll up, pay for a year of insurance and be cover for the last 5 years.

The umbrella / PAYE route.

We've all accepted the pay cut (it's not as bad as 30% for me as I don't claim any expenses/live local etc anyway), it's the fear of being declared 'inside' and retrospective tax that's been worrying us all.

Rate will be same I think for now and we'll have to see what happens in 6 months time; reckon the rate will have to increase the way it did in the public sector.

There is still a risk but it's smaller than being declared 'inside' surely.

I may take up the basic insurance just to cover me with an adviser if I do get investigated.

[dsc]

Very good point. Let's hope my client take that route... believe we're supposed to hear something at the end of Jan.

Still... considering IR35 insurance 'just in case'.

Does anyone have any thoughts on my original question around that?

Takes which route? The individual assessments or umbrella / PAYE? The latter means at least 30% less money via umbrella assuming they keep your rate the same or depending on your skillset and industry an even bigger cut when moving to PAYE. There's also the risk of moving from PSC to umbrella / PAYE with the same company, which can be seen by HMRC as admitting that you've always been an employee.

As for owed-tax insurance I doubt you'll get cover for past years as then anyone could just roll up, pay for a year of insurance and be cover for the last 5 years.

[mrrossi]

Picking the brolly / PAYE route is as easy way out for companies as with a proper IR35 determination you have to go through each contract (no blanket assessments), most likely get an outside company to do it as most (all?) companies are clueless on IR35 and then even if you decide everyone is inside, you theoretically have to offer an appeal route. Why go through all the faff if you can just make a rule that from April onwards no PSCs are allowed, then wait for most companies to do the same and thus create a market full of contractors without contracts to pick and choose from.

Very good point. Let's hope my client take that route... believe we're supposed to hear something at the end of Jan.

Still... considering IR35 insurance 'just in case'.

Does anyone have any thoughts on my original question around that?