Agency IR35 Tool/ Indemnity Agency IR35 Tool/ Indemnity
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  1. #1

    Fingers like lightning


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    Default Agency IR35 Tool/ Indemnity

    I had an interesting chat with my agent from Venturi today. They have come up with a product which is an IR35 assessment tool, which is reviewed by a bench of lawyers and crucially, backed by an insurance policy which will indemnify an end-client of up to £100k worth of risk for a wrong IR35 assessment. They reckon while CEST is finding something like 90% of contractors inside IR35, they reckon their tool classifies around 80% of contractors outside of IR35.

    End-clients pay a fee to use the tool to assess their contractors and contractors pay a fee for the indemnity policy for the client, so if a client classes you as Outside IR35 using the output of the tool, and is found to have made a wrong decision and faces a fine for the IR35 costs, the insurance will pay out.

    Sounds interesting

  2. #2

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    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?

  3. #3

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    Quote Originally Posted by JoJoGabor View Post
    I had an interesting chat with my agent from Venturi today. They have come up with a product which is an IR35 assessment tool, which is reviewed by a bench of lawyers and crucially, backed by an insurance policy which will indemnify an end-client of up to £100k worth of risk for a wrong IR35 assessment. They reckon while CEST is finding something like 90% of contractors inside IR35, they reckon their tool classifies around 80% of contractors outside of IR35.

    End-clients pay a fee to use the tool to assess their contractors and contractors pay a fee for the indemnity policy for the client, so if a client classes you as Outside IR35 using the output of the tool, and is found to have made a wrong decision and faces a fine for the IR35 costs, the insurance will pay out.

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

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    Liberty Bishop have a youtube video about their IR35 assessment tool, determinations also backed by insurance.
    Its a platform aimed at agencies and who can label it as their own and make it part of their service offering to end clients.
    Not sure how successful this one has been, but its encouraging to hear that JJB's agent has developed a similar tool.

    Search for 'IR35 Solution Tool Liberty Bishop' on youtube if interested. Not much detail in there about how the insurance works though.

  5. #5

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    So ir35 tax loss insurance companies are basically now retargeting their product away from contractors and at clients.

  6. #6

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    Quote Originally Posted by JoJoGabor View Post
    contractors pay a fee for the indemnity policy for the client, so if a client classes you as Outside IR35 using the output of the tool, and is found to have made a wrong decision and faces a fine for the IR35 costs, the insurance will pay out.
    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?
    Maybe tomorrow, I'll want to settle down. Until tomorrow, I'll just keep moving on.

  7. #7

    Still gathering requirements...


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    There's a few new / repackaged products on the market but as far as I'm aware Kingsbridge are the only insurer who have no prospect clause when you use their choice of assessment providers. All of those I've reviewed have shifting cover for shifting liability, options for assessment, representation + liability insurance.

    Variations are around level of cover, prospect clause, assessment options (some are fixed to 1, some have a group) and the run off period.

  8. #8

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    Quote Originally Posted by JoJoGabor View Post
    I had an interesting chat with my agent from Venturi today. They have come up with a product which is an IR35 assessment tool, which is reviewed by a bench of lawyers and crucially, backed by an insurance policy which will indemnify an end-client of up to £100k worth of risk for a wrong IR35 assessment. They reckon while CEST is finding something like 90% of contractors inside IR35, they reckon their tool classifies around 80% of contractors outside of IR35.

    End-clients pay a fee to use the tool to assess their contractors and contractors pay a fee for the indemnity policy for the client, so if a client classes you as Outside IR35 using the output of the tool, and is found to have made a wrong decision and faces a fine for the IR35 costs, the insurance will pay out.

    Sounds interesting
    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.
    Best Forum Adviser & Forum Personality of the Year 2018.

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  9. #9

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    Agency tool

    Sounds more like it to me


    Sent from my iPhone using Contractor UK Forum

  10. #10

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    Quote Originally Posted by GhostofTarbera View Post
    Agency tool

    Sounds more like it to me


    Sent from my iPhone using Contractor UK Forum
    Is this an agency version of a tax avoidance scheme I wonder?

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