Agency IR35 Tool/ Indemnity

[Venturi]

I've seen a tool called IR35 Shield for business (client co) to do the SDS but didn't see an insurance option to go with. Assume this is something completely different?

Hi CheeseSlice,

IR35 Shield is a competing product. Two key differences from the VentruiOPRaaS product, as far as we are aware:

a. They do include insurance, but policy covers defence costs only – it does not indemnify the potential tax loss
b. The status assessment is all AI-driven, as opposed to our more nuanced consultant-lead approach.

[Venturi]

£100k per contractor, per client, aggregate limit?

The VenturiOPRaaS policy provides £100k per contractor per annum for the liability element, no aggregate limit.

There is a £100k limit on the defence costs element, which is in the aggregate across all contractors, but still on an ‘any one claim’ basis (i.e. in the unlikely event of two claims, each would have a separate £100k LOI).

[Venturi]

Does it also cover the contractor from liability being shifted from client to agency to contractor, seeing as the contractor is paying for the client's insurance, if my understanding of your wording is correct?

In the unlikely event that there is a transfer of liability to the contractor following an enquiry under the new legislation, they would be covered under the policy. One important note here though – the contractor is paying for the status determination, not the insurance.

Venturi’s Insurance partner will provide the insurance FOC, which is an important distinction from a regulatory perspective.

[Venturi]

The tool is used to determine status and if outside, the contractor pays the premium but the client is able to claim the £100k if that decision is ultimately challenged and found to be incorrect?

How long does the fee obligation go on for? Just until the gig ends or until HMRC is no longer able to raise an enquiry?

Interesting economics which work only if it's for the possible enquiry period which is (probably) 4 years from the tax year end.

Assuming that the fee for the initial assessment washes its face, you then have an average of 4.5 years of premiums and if their "80%" is correct (and for me, that is alarm bell sounding) then 20% of their population gets an enquiry.

They will win some of those enquiries, perhaps most. However, HMRC will make them long, painful and expensive.

Average cost of an enquiry? At least £50k - perhaps more.

100 clients, 4.5 years, risk of 20 x £50k = £185 a month.

If 10 enquiries, then £92 a month.

Thinking aloud obviously and clearly it's an area in which we have a commercial interest so I'm not expecting an answer.

Contractor pays for the status determination; agency has an insurance policy in place to cover tax loss in the event that that determination is incorrect following HMRC enquiry.

The obligation for the contractor to continue paying for status determinations (which I assume is the ‘fee obligation’) lasts for as long as the gig. The insurance policy has a notification period extending 6 years, and so will cover a subsequent enquiry launched by HMRC in the years following the engagement.

[CheeseSlice]

Thanks for the responses Venturi.

Can you comment on the figure quoted in the first post in this thread, that around 80% of determinations via your solution will be 'outside IR35'?
I'm guessing (and hope) this was just a throw away figure to highlight that it is more accurate than CEST.

As a contractor these solutions are interesting, as they could provide some reassurance that agencies and clients wont have to either blanket assess everyone inside IR35, use MSP or Consultancy structures, or just turn their backs on outside-IR35 contractors entirely.

[Venturi]

Thanks for the responses Venturi.

Can you comment on the figure quoted in the first post in this thread, that around 80% of determinations via your solution will be 'outside IR35'?
I'm guessing (and hope) this was just a throw away figure to highlight that it is more accurate than CEST.

As a contractor these solutions are interesting, as they could provide some reassurance that agencies and clients wont have to either blanket assess everyone inside IR35, use MSP or Consultancy structures, or just turn their backs on outside-IR35 contractors entirely.

Hi CheeseSlice,

Apologies for the late reply.

• The ‘80%’ figure is a rough pass-rate for contractors assessed via our insurance partner's Status Review platform – it is not our view that 80% of PSC contractors are outside IR35.
• Whilst the CEST tool is widely regarded as categorising contractors too readily as inside IR35, hence the 90% figure, it is not a like-for-like comparison with our results (or others in the market).
• In short, as suggested in the original question, our figure is used to illustrate that we do not agree with the view suggested by CEST that ‘90% of contractors’ are inside IR35.

[craigy1874]

Hi CheeseSlice,

Apologies for the late reply.

• The ‘80%’ figure is a rough pass-rate for contractors assessed via our insurance partner's Status Review platform – it is not our view that 80% of PSC contractors are outside IR35.
• Whilst the CEST tool is widely regarded as categorising contractors too readily as inside IR35, hence the 90% figure, it is not a like-for-like comparison with our results (or others in the market).
• In short, as suggested in the original question, our figure is used to illustrate that we do not agree with the view suggested by CEST that ‘90% of contractors’ are inside IR35.

How are you planning on getting end clients to look at this though? I mean it looks as though banks have already made their mind up?

[simes]

How are you planning on getting end clients to look at this though? I mean it looks as though banks have already made their mind up?

And THAT is the million $ question.

Salespeople and cold calling?

[craigy1874]

And THAT is the million $ question.

Salespeople and cold calling?

If that is the plan, I don't see it getting off the ground unfortunately.

[Venturi]

How are you planning on getting end clients to look at this though? I mean it looks as though banks have already made their mind up?

Hi Craigy,

This is a solution for any existing and future clients using Venturi's contractor staffing services.

For internal compliance, all contractors working through Venturi will have to go through this test to determine their IR35 status unless exempt or payed directly by the client acting as end-user.

In any scenario where we are prescribed as the fee-payer the contractor would have to run through our tool to continue working with us post April 2020. (Unless the client is exempt)