Why IR35 insurance isn’t the panacea for NHS contractors it once was

Medical freelancers operating free of IR35 cover is one thing. Switching it off entirely in the era of ‘fully contracted out’ is quite another.

You’ll not often encounter an IR35 insurer frank enough to say IR35 protection is much less of a thing nowadays.

Then again, you’ll not often come across a doctor – individuals who tend to have a high regard for protecting oneself – justifying why NHS contractors are today operating without IR35 insurance.

But this is the Kingsbridge Blog, where these two (surely wrong!) admissions make a right; they are the absolute truth, writes Kingsbridge IR35 Project Manager Ryan Dawson.

The doctor, the locum, and me (the IR35 Project Manager)

The doctor saying the seemingly astonishingly unthinkable was Dr Iain Campbell.

A clinician who is also legally trained, Dr Campbell was backing up another legal eagle, Stephen Mhirbidi, who like himself now freelances in a medical role as a locum, after Mhirbidi said ‘most healthcare contractors won’t be insured against HMRC’s IR35’.

In an exclusive blog for us on the NHS, IR35 and tax schemes, Dr Campbell agreed.

The ‘less likely’ requirement that is IR35 insurance…

Dr Campbell argued there’s less HMRC risk to contractor limited company directors, personally, insofar as IR35 is concerned, than there once was, making IR35 insurance in 2025 a “less likely” requirement.

As mooted at the top of this blog, it’s perhaps not a position that you might expect from a professional dedicated to keeping people out of harm’s way!

But I’m here to tell Kingsbridge Blog’s readers that both these senior NHS contractors (Mhiribidi and Campbell) are correct. In other words, their assertions that contractors in the medical sector tend to be uninsured against IR35 are totally valid.

IR35 insurance? Not the panacea for NHS contractors it once was

From what we’ve seen in 2025, IR35 insurance is generally something which limited company contractors think less about.

However, it’s not because the cover itself is any less significant. On the contrary, as I outlined on May 20th 2025, insurance against HMRC’s clutches under the Intermediaries legislation can be comprehensive.

No, IR35 protection slipping off the radar of the average Personal Service Company (PSC) contractor, is more about the nature of the April 6th 2017 and 2021 reforms to IR35.

These reforms are known as the Off-Payroll Working (OPW) rules.

Eight years of IR35 freedom 

I can go further. Today, the majority of NHS contractors – in particular – have been completely free of any IR35 obligations for some eight years.

The reason contractors have had this freedom since 2017? It’s two-fold but straightforward. The administrative burden and tax risks under the OPW rules simply sit above them in the chain.

So this is why most healthcare contractors won’t currently have IR35 insurance in place, or perhaps won’t even be thinking of taking out such cover.

Dr Campbell was right about something else.

Role-based, blanket IR35 status determinations are commonplace in the National Health Service because, wanting to keep tax risks under the OPW rules at bay, many NHS trusts simply won’t entertain individual IR35 status assessments.

Fully contracted out services – the side-effect of NHS risk-aversion to IR35

There’s a side-effect of the NHS’ risk-averse approach.

It happens in the private sector too, but the public sector, and the NHS specifically, is very big on taking on contractors via a “fully contracted out” service.

The aim? To avoid OPW obligations entirely.

A touch of OPW opaqueness: who’s truly the client, and which status rules apply?

There’s a high level of complexity in such “managed services” (see HMRC’s guidance here), to the extent that these arrangements are a blog in their own right.

So they’re a topic for another day.

But in some cases, “fully contracted out” arrangements can leave contractors at HMRC risk, due to the PSC worker simply not knowing who the end client truly is.

“Fully contracted out” also has the potential to make it much trickier to know what set of IR35 rules (IR35 of 2000, or OPW) applies to a particular engagement.

As an IR35 insurer, what’s our advice?

Contractors across all sectors, not just the NHS and public sector, should ask the right questions of their clients to establish whether they – as PSC, external suppliers – carry any significant IR35 risks.

As a limited company contractor, take direct steps to identify your end client’s:

• Sector;

• Size (make sure to check all three ‘small company’ size thresholds), and finally;

• Location.

This trio should provide all contractors need to understand whether the Intermediaries legislation – IR35 (Chapter 8 ITEPA) – or the off-payroll working rules – OPW rules (Chapter 10 ITEPA) – apply.

When carrying IR35 insurance might be worthwhile

In most instances, end-client organisations offer these three strands of information voluntarily.

But everybody in the supply chain must be clear about which status rules apply, so contractors can then make an unclouded decision as to whether carrying IR35 insurance might be worthwhile.

Keep in mind, many IR35 insurance products include a significant amount of coverage in various forms.

So even if IR35 might not be your primary reason to hold HMRC investigation insurance, the additional cover that such policies provide can make the product worthwhile.

Various contracts + various end clients = get IR35 protection 

As the medical-legal skillsets of the two Kingsbridge Blog contributors who inspired this piece nod to, contractors are versatile professionals.

If that’s you too, because you have various contracts throughout the year with various end clients, IR35 cover can prove second to none at protecting you where the IR35 determination is yours to make.  

Today, most insurers in the contractor space have evolved, by refocusing their products towards fee-payers and end clients – the parties on the hook under the OPW rules.

We hate to talk about our own IR35 insurance policies for fee-payers, PSCs and hiring companies, but…

At Kingsbridge, for example, we offer ‘Off-Payroll Protect’ insurance, which is only available to fee-payers and end clients. And we offer ‘IR35 Protect’ – available to fee-payers and end clients, plus contractors (although for the reasons mentioned previously, the number of NHS trusts taking up this protection isn’t high).

That said, a hefty majority of businesses that are sleeping soundly at night due to having our IR35 protection in place are those affected by the OPW rules of April 6th 2021.

We were pleased to see our IR35 Protect policy react to HMRC, defending an entity from tax officials’ activities, only very recently.

HMRC has turned its focus to OPW, where ‘fully contracted out’ refreshes PSCs’ cover needs

Yet insurance claims from individual contractors who are operating under ‘old’ IR35 are today few and far between.

These claims being less abundant than in the past potentially reflects HMRC’s enforcement activities over the last couple of years turning to focus on OPW.

And it’s growth in the “fully contracted out” services model (a key part of the 2017/2021 frameworks) that explains why many more contractors may find their services being provided to ‘small company’, OPW-exempt service providers – meaning they return to being responsible for IR35 and bearing its risks.

Final diagnosis

So, Dear Contractors, where this is the case – and to assist you in the event of your own IR35 case – IR35 insurance will be an important tonic to reach for once again in staying commercially healthy and financially safeguarded.

How we can support you with IR35

We mention our own IR35 Protect and Off-Payroll Protect policies, but fundamentally we’re here to offer tailored support and expert guidance on IR35 status assessments, compliance strategies, and risk mitigation. Our team is dedicated to helping contractors and businesses understand and adapt to the evolving tax landscape.

We also offer a range of flexible business insurance options to support contractors, including Professional Indemnity, Public Liability, and Employers’ Liability cover (plus add-ons like Cyber Insurance & Director and Officer’s Liability) so you can keep your policies in one place and make managing your business simpler.

To find out more, get a quote or contact us today.