Contractor IR35 Insurance
Whilst you will make the best efforts to ensure you are operating compliantly with the IR35 legislation, which for most, will mean operating ‘outside IR35’, HMRC have never and will be unlikely to ever, release their selection criteria for enquiries.
With this uncertainty around the process for selecting companies, coupled with an opinion-based determination for IR35 status which leaves ambiguity for any contractor trying to ensure they are operating compliantly, and the potential for the upper-level contract to be used against them despite having no right to ever see it (which is commonplace), any contractor remains at risk of investigation for IR35.
Dealing with HMRC yourself - particularly in an IR35 enquiry - is difficult, and it’s far better to have someone with experience of handling investigations to fight your corner. Having IR35 insurance in place will provide you with the reassurance that, even if the worst was to happen, you wouldn’t be facing a potentially crippling sum.
There are two types of policy available to contractors that will cover tax and IR35 risks:
- Defence only
Firstly you could consider a basic tax enquiry insurance policy, which will cover an expert’s fees in handling your case in the event of an HMRC enquiry. This means that as soon as you get a letter from the Revenue notifying you of a review or enquiry, you can send it to the expert and they will handle things from there.
A more popular option is to take out a full policy which will not only cover an expert defending your case in any HMRC enquiry, but also the liabilities if you are subsequently found to be caught by IR35. Given that being found to be inside IR35 is likely to result in a demand running into the tens of thousands of pounds, it is obviously a risk that many contractors are keen to avoid. Comprehensive IR35 insurance policies can be provided with differing limits of indemnity to suit your liability risk (dependent on day rate and length of time contracting for example). Click here to book a free and in-depth IR35 calculation with Qdos Contractor’s experts.
ContractorUK has partnered with Qdos Contractor (the author of this article), who can provide contractors with an appropriate IR35 insurance policy with an exclusive 10% discount for ContractorUK readers (see below).
Qdos are well established contractor specialists; they have defended over 1,500 cases and saved contractors over £35million in tax. Click here to view their website and buy online.