QDOS - TLC35 liability cover endorsement - makes cover worthless.

[Qdos Contractor]

I'll try to summarise our position as clearly as possible below and will then deal with any specific subsequent questions. Naturally very little is black and white with IR35 and it's impossible to cover every scenario, but I hope the confirmation below will provide reassurance around the TLC35 policy.

• Contractors are presented with the application statements when purchasing the policy, where we ask them to confirm, to the best of their knowledge, that they are accurate
• The statements are specifically confirming the contractor’s understanding of the working practices – not the client’s or HMRC’s
• If a contractor contacts us to suggest that there is doubt over these statements, we may advise them to seek clarification or take further due diligence
• However, we appreciate that obtaining any form of confirmation from end clients around issues like substitution is difficult and doing so is not a mandatory requirement
• If a contractor is subject to an investigation and, during the course of the enquiry, HMRC decide that there isn’t a valid right of substitution, the policy will still cover the contractor – unless the contractor was specifically aware that this was the case
• Contractors can obtain an IR35 review of their contract, giving them a view on the written terms between them and their agency. This is not a fully conclusive assessment of the circumstances and clearly sets out to give an opinion on the written terms only. For robust due diligence we would always suggest a contractor incorporates a review of their working practices. Neither review is a requirement of the policy
• Qdos has never rejected a claim on the policy on the basis that there were insufficient Prospects of Success

[Kanaiya]

[*]If a contractor is subject to an investigation and, during the course of the enquiry, HMRC decide that there isn’t a valid right of substitution, the policy will still cover the contractor – unless the contractor was specifically aware that this was the case
[/LIST]

Can you please clarify - unless the contractor was specifically aware that this was the case


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[northernladuk]

Can you please clarify - unless the contractor was specifically aware that this was the case

A contractor mentions his right to substitute in conversation with a client and they turn round and say no chance. Contractor just carries on not realizing he's just shot himself in the foot. Bit like someone on here did once.

[Kanaiya]

A contractor mentions his right to substitute in conversation with a client and they turn round and say no chance. Contractor just carries on not realizing he's just shot himself in the foot. Bit like someone on here did once.

So no insurance cover and QDOS won’t pay for the liability


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[northernladuk]

So no insurance cover and QDOS won’t pay for the liability


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Yup. It only stands if its in the contract and untested. If you know it won't stand but its in the contract and part of QDOS's defense you've failed to inform them of a change in circumstances. No insurers like that. Try putting over sized after market alloys on a car, not tell them and then try claim for an accident for example.

[Kanaiya]

Yup. It only stands if its in the contract and untested. If you know it won't stand but its in the contract and part of QDOS's defense you've failed to inform them of a change in circumstances. No insurers like that. Try putting over sized after market alloys on a car, not tell them and then try claim for an accident for example.

In that case should QDOS should verify the application and should say no to provide the insurance. But it’s not the case.


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[GhostofTarbera]

In that case should QDOS should verify the application and should say no to provide the insurance. But it’s not the case.


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Like a car insurance company coming round before your claim to check your alloy wheels you have not told them about?

You are dreaming mate


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[ladymuck]

In that case should QDOS should verify the application and should say no to provide the insurance. But it’s not the case.


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I think you missed the point a bit. If your circumstances change, the onus is on you to inform the insurer or risk invalidating your insurance. That's how it works with all insurances.

They accepted you for a policy based on what you told them. If that turns out to be incorrect, or the situation has changed and you never said anything, then they are well within their terms to cancel the policy or restrict payout.

[Kanaiya]

I think you missed the point a bit. If your circumstances change, the onus is on you to inform the insurer or risk invalidating your insurance. That's how it works with all insurances.

They accepted you for a policy based on what you told them. If that turns out to be incorrect, or the situation has changed and you never said anything, then they are well within their terms to cancel the policy or restrict payout.

Thank you and I totally understand and agree on the point. That’s what the exact words I want to hear from QDOS saying that the contract document is irrelevant and if the client says the substitute clause is invalid the insurance is cancelled and they won’t pay for the liability.


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[LetterBox]

Thank you and I totally understand and agree on the point. That’s what the exact words I want to hear from QDOS saying that the contract document is irrelevant and if the client says the substitute clause is invalid the insurance is cancelled and they won’t pay for the liability.


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Devil = detail

If a contractor is subject to an investigation and, during the course of the enquiry, HMRC decide that there isn’t a valid right of substitution, the policy will still cover the contractor – unless the contractor was specifically aware that this was the case

Assuming there is, as per usual, a sub clause with caveat in a contract. The question would be, during the course of the enquiry, what if the client decide that there isn't a valid right of substitution? And does a valid right equate to something that has not caveats?

Murky.