Is IR35 Insurance worth it?
One of the greatest obstacles if you’re a contractor, recruiter or end client that engages with contractors, is dealing with…
There are around seven weeks to go until the private sector IR35 reforms are implemented, so contractors really are in the last-chance saloon in terms of getting ready. Hopefully, you’re feeling well prepared and have done everything you can, but if you’ve not done much or if you feel as if you could do more, now really is the time to get things going.
If you sit back and do nothing at this point, you really do run the risk of clients giving you a status you don’t agree with, which could result in you paying the same tax as employees but without all of the perks of actually being an employee.
Whether you’re finally taking steps to get yourself organised, or whether you’re pretty much there but want to make sure you have all bases covered, Kingsbridge have got the best preparation tips for contractors getting ready for IR35 right here.
Education, education, education
If you still don’t fully understand IR35 then now really is the time to educate yourself. If you have an accountant then you can always contact them for advice, but if you’re the type of learner who takes in information better from reading, then we have you covered.
The Kingsbridge Knowledge Hub has a section devoted to IR35, filled with features and articles on the topic. Whether you’re looking for a history of the legislation, advice on what to do if you’re found inside IR35, or a good old fashioned jargon-buster to help you through the often confusing terminology, the Knowledge Hub has your back.
And remember, it’s where we also publish our regular Ask Andy features, where Kingsbridge Head of Tax, Andy Vessey, answers your questions on IR35, which you can submit to him here.
Check your contract
This is one that every contractor should be doing – and it’s a two-step process.
- Gather together any contracts that you have that will be active on or after 6th April 2021 and read them carefully. Check all of the terminology and clauses in relation to the three main status tests of personal service (including right of substitution), mutuality of obligation (MOO), and client control and flag up any causes for concern that could find you inside IR35.
- Check your contract against the reality of your working practices. Sure, your contract may look sound on the face of it, but does it accurately reflect the working relationship between your PSC and your client? If not, if any of your day-to-day working practices for a client could place you inside IR35, you’ll want to make a note of it.
If you have any worries or cause for concern and want to change things so that you’re irrefutably outside IR35, you’ll want to have a chat with your client. Which brings us neatly round to…
Communication is key
Ultimately, your end client is the one who has responsibility for issuing your Status Determination Statement (SDS) so the final decision lies with them. This doesn’t mean you can’t have any input, however, even if you’re happy with your contract and working practices, it’s worth checking in with your client to ensure that:
- a) they’re prepared for the reforms themselves, and
- b) you’re both singing from the same hymn sheet in terms of your status.
You can also let them know what preparations you’re making in terms of insurance and status tools, both of which we’ll discuss in a moment.
If your contract check has raised any issues for you, you should also raise this with your client while there’s time to make changes. You could discuss a new contract with more definitive clauses and wording, or you may want to make changes to your working practices to create clearer boundaries between you and their employees.
It’s in your client’s interest to get your SDS right so this kind of communication should be seen as helpful rather than intrusive or demanding.
Cover everyone’s backs – including your own
If you want extra peace of mind with IR35, as well as the chance to make yourself a more desirable hire (and who wouldn’t want that?) there’s always the option of purchasing Kingsbridge’s IR35 Protect insurance.
This is a market-leading insurance product that covers for the costs that can arise from an IR35 inquiry such as defence costs, taxes, interest and penalties. What makes it unique is its ability to flex to cover whoever in the contractor supply chain holds the liability, whether that’s your end client, your recruiter or, in the case of pre-April 2021 contracts, you.
One insurance policy, cover, and reassurance for everyone in your supply chain. That’s a clear point in your favour when it comes to being hired.
Back up your status
The other thing you can do is get a third-party opinion on your IR35 status. HMRC’s CEST tool isn’t always reliable, so we recommend using our own award-winning Kingsbridge IR35 Status Tool to get an instant, accurate result. Developed by Andy Vessey, it asks between 29 and 34 carefully crafted yes/no questions to get a rounded view of your contract and working practices in order to issue you with a status determination.
If your case is clear-cut, you’ll get an instant determination of inside or outside IR35, along with a full, comprehensive report. If your result is borderline, it will be passed to one of our in-house IR35 experts who will go through your answers and then issue you with your determination.
This kind of review gives you and your end client complete confidence in your SDS, as well as letting you know areas where you may need to make changes to be more comfortably outside IR35. The service costs just £50 plus VAT, although if you purchase our IR35 Protect Premium package, you have unlimited reviews included.
Hopefully you now feel you have some definitive steps to take regarding IR35 and can prepare confidently. If you’d like to find out more about the ways in which Kingsbridge can help, give us a call on 01242 808740.
