IR35 Insurance

What is IR35 Insurance?

Roots is steeped in IR35 experience, having been involved in and around it since the mid 2000’s. We’ve used this expertise to bring to market our IR35 Insurance, which has been specially designed for contractors to provide them with professional representation for the defence of HMRC IR35 status investigations as well as tax, VAT, PAYE, NIC and Section 660a enquiries.

We’re one of the few companies to be able to cover the tax liabilities, interest and penalties that HMRC deem due at the conclusion of their investigation.

You also get access to our sister site The Contractor Compliance Portal where you can get access to completely free, no-obligation, online IR35 assessments, allowing you to fully assess, understand and document your IR35 status. Not only that, if your IR35 assessment comes back as ‘Outside IR35’ then the ‘Prospects of Success’ clause is removed in the event of a claim.

Why choose a Roots IR35 Insurance cover?

Quite simply, it’s the only policy on the market that gives you the ability to tailor it to your exact requirements, and prices start from just £50.00 (inclusive of Insurance Premium Tax) for £100,000 worth of cover for the cost of professional representation to defend against a range of HMRC investigations and enquiries, including into IR35 status.

The policy can be extended to add on £100,000 of cover for IR35 tax liabilities, interest and penalties for both the ‘old’ IR35 rules where HMRC investigations are opened under Chapter 8 of the ITEPA – known as ‘the intermediaries’ legislation, and to insure against the ‘new/current’ IR35 rules where HMRC investigations are opened under Chapter 10 of the ITEPA – known as the ‘off-payroll’ legislation.

Every contractor is at risk of an HMRC investigation, be it a random selection, thematic review, or from something that triggers HMRC to look into your tax affairs. In the event of a claim you get expert professional representation to defend the claim against HMRC, giving you the best possible chance of being successful.

Our policies are underwritten by a UK insurer and claims are handled by recognised UK tax and IR35 professionals, giving you expert representation when you need it the most.

Policy Document Links:

• Policy Summary
• Policy Wording

IR35 Investigation Insurance Policy Benefits

Tailored For Contractors

All of our insurances and IR35 status reviews are designed to the exact needs of contractors, they’re not generic off-the-shelf policies. We back it up with highly experienced staff who are able to answer any queries may have, all from our Loughborough office in the heart of the Midlands.

Frequently Asked IR35 Insurance Questions

Who needs IR35 insurance?

Following the recent legislative changes contractors are still responsible for assessing their IR35 status where the engagement is with a ‘small company’. A small company is defined as a company with any 2 of the following 3 characteristics; Less than £10.2m turnover, less than 50 employees or a balance sheet of less than £5.1m.

Given the policy also includes cover for HMRC tax, VAT, NIC and PAYE enquiries and investigations, should I take it out?

Definitely. IR35 status enquiries are only one part of what is a larger insurance policy. The cover extends to cover almost all HMRC enquiries that cannot be foreseen – including partial and full tax investigations, VAT, NIC, PAYE and Construction Industry enquiries. The policy also provides protection should a HMRC dispute require an appeal or tribunal hearing.

I no longer contract, do I need IR35 cover?

Yes. HMRC can investigate you and go back up to four years without reason, and up to six for careless errors. Therefore just because you have ceased working as a contractor does not mean that there is no risk as HMRC will await tax returns to be submitted in due course, analyse them and then open an investigation if they deem fit. This means it can be a couple of years post finishing contracting that a very real risk remains, and is the period that continuous IR35 cover should be held for.

I don’t work for a small company or assess my own IR35 status

Under the new legislation where a contractor works for a medium or large sized end client they will be responsible for determining the IR35 status of the engagement. In this situation there is no requirement for IR35 cover in the form Roots offers. However, as per the reasons and risks as outlined in the ‘I no longer contract, do I need insurance?’ question we recommend you hold IR35 cover if you have determined your own IR35 status at any point in the past couple of years.

I work under an umbrella firm, do I need IR35 cover?

If you have always worked under an umbrella firm then no you do not need insurance. However, if you have spent time working as a contractor outside of IR35 in the past couple of years at any point then yes you should hold cover – for the very same reasons and risks as outlined in the ‘I no longer contract, do I need IR35 cover?’ question.