Since the new changes to IR35 legislation was introduced during April of this year, businesses are often being advised to purchase IR35 insurance in addition to their other insurances for business. We understand that you are thinking “why should I require more coverage?”, particularly when the responsibility for IR35 has been transferred frequently towards the person who pays the bill.
You might be thinking that it’s not something that’s affecting you anymore.
There are many benefits of getting insurance through IR35, especially in the case of an insurance package which goes over the basic professional and legal fees and helps ensure that your protection from every angle. What are the advantages?
Contractors are still liable for IR35
The IR35 reforms haven’t changed things for every engagement with a contractor, and there remain instances where a contractor is liable the tax obligation. For example the IR35 reforms only affected large and medium firms and the contractors employ them.
If your client qualifies as a small company, you, the contractor remain liable for all matters relating to IR35 such as the determination of status to tax. To be considered a small-sized business they must meet at least two of these criteria:
Amount of annual turnover not more than £10.2 million.
Balance sheet with less than £5.1 million.
Average of less than 50 employees in the fiscal year.
Another scenario where you could be subject to IR35 is when you are employed by clients from outside the UK with no connections whatsoever to the UK which means that there is there is no tax obligation here. Find out more about working outside of the UK here.
In both cases you as the contractor will remain responsible for registering you IR35 condition and paying appropriate taxes and National Insurance contributions. If you have insurance for IR35, then this would mean that you’re protected should you be questioned by HMRC.
Guard your assets
Insuring yourself with IR35 insurance will help your financial security in the event that you find yourself unlucky in a court case that is a part of HMRC. It will generally cover taxes, interest and penalties which you may be held accountable for, so you don’t need to pay a massive cost out of your own pockets.
Legal expenses are paid
If you opt for a plan that provides legal expenses and legal expenses, you could also get coverage for tax and PAYE NIC investigations that are not covered by IR35 laws in addition to professional and legal costs related in the IR35 investigation.
Legal expenses insurance will offer protection for additional aspects that could be covered, such as legal disputes as well as personal injury claims identity theft juror service, and debt recovery services. These are expenses that contractors rarely think about until they are forced to face them (no one wants to be summoned to jury duty) So having a suitable legal expenses insurance on your policy will allow you to keep avoiding these costs unless you’re forced to.
All you have to do is call.
Make yourself more attractive to customers
Certain IR35 policies are flexible to protect the person who holds the responsibility for an engagement. This is an ideal solution in the context of new regulations because there are times when you’re the one who is responsible but sometimes it’s the client and other times the recruiter is your.
With more and more clients becoming and more cautious in the emerging IR35 world, having an insurance policy that is able to do this could put you ahead of the rest in getting contracts secured because you’re taking care of the financial risk of the client and protecting your own as well which means everyone’s satisfied.