How to insure your tools: a tradesperson’s guide
Most tradespeople spend a lot of time thinking about the next job, the next customer, or the next challenge on…
Kingsbridge have been hosting a series of online and offline events; the latest being an Industry Insight panel discussion held in Manchester, designed to help Recruitment businesses prepare for the change in the off-payroll rules.
For anyone unable to make these events, Kingsbridge hold Industry Insight webinars. In the latest, Kingsbridge’s MD, Thomas Wynne, and Legal Manager, Nicola Hayman, outlined how recruiters can protect themselves – and everyone else in the contractor supply chain – using our IR35 Protect and Off-Payroll Protect Products when the IR35 reforms take effect on 6th April. In this blog, we’ll outline what was discussed so, if you missed it, you can get up to speed.
IR35: the story for recruiters
IR35 is close now, with draft legislation in place and the announced review unlikely to cause any delays. If, as a recruitment organisation you haven’t begun to prepare yet, it’s now too late to have all your processes in place by the time the reforms hit, but that doesn’t mean you shouldn’t start. It’s definitely a case of better late than never.
It’s important for recruiters to remember that the reforms should not affect genuine contractors. In fact, contractors that are genuinely ‘outside IR35’ should be able to continue working this way after April. One of the biggest changes for you as a recruiter is that you, as the fee-payer, will now be taking on risk in terms of tax liability. The good news is, Kingsbridge has an insurance product that will protect you, essentially removing that liability.
About IR35 Protect and Off-Payroll Protect
“What we have built is an insurance product that removes the tax liability from the supply chain and allows clients and recruiters to continue to hire legitimate contractors ‘outside IR35’ without assuming any additional risk”
– James Twining, CEO, Kingsbridge, 2019
IR35 Protect is underwritten by an A-rated insurer. Kingsbridge paid out 100% of valid claims, so you can be confident that this is a product that will pay out. It covers the entire supply chain for the length of the liability, regardless who purchases, and it offers up to £100K cover for tax, interests and penalties, as well as defence costs per contractor per tax year. It indemnifies status determinations from a number of providers, and these are defended by one of the UK’s foremost IR35 experts, Andy Vessey and his team at Larsen Howie.
And if that weren’t enough, Prospect of Success is automatically met if status is determined by Kingsbridge Approved Reviewer, Larsen Howie or in-house by recruiter using an approved process. This means an SDS is automatically defended if challenged. If status is determined by another method, the insurance is still valid, but Prospects of Success must be met before a defence is made.
It can be purchased by the contractor (IR35 Protect) or by the recruiter (Off-Payroll Protect) so all you need to do is decide which to use and take the necessary steps.
If you decide on IR35 Protect you will need to implement a clause into contracts, specifying that contractors must purchase annual IR35 cover alongside their standard contractor insurance. You should then communicate this to contactors’ and we can help with this with our template email.
If you would prefer to purchase the cover as an organisation, Off-Payroll Protect will be live later this month. You need to fill in a proposal form with information about your business and then simply let us know each month how many recruiters you have placed outside IR35 and we’ll invoice accordingly.
No matter which you choose, all parties in the supply chain, including end clients and contractors, will be covered.
Message to clients
So, what should message to clients be from recruiters?
- We’re happy to place genuine contractors outside IR35
- We will work with clients to determine status
- We will take a belt and braces approach and insure against risk of misclassification with all legal costs and penalties covered
- We’re removing the tax liability risk for all parties
- In the event of a HMRC challenge, this would be defended by UK’s foremost IR35 expert
In real terms this all means:
- There’s no need for blanket bans or PAYE policies
- Legitimate contractors can continue working as normal
- Client meets reasonable care requirements, which they wouldn’t with blanket policies
- Fee-payers are risk covered
- There will be no additional PAYE or NIC requirements
- There’s a plan in place for any HMRC challenges
Next steps for recruiters
Now is the time to decide on how to make status determinations. If you would like a list of Kingsbridge’s approved IR35 reviewers, you can email us at [email protected]. Once you’re decided, confirm this approach with Kingsbridge as soon as you possibly can and then decide on IR35 Protect or Off-Payroll Protect and communicate this to your clients and contractors. You’ll then be all set for 6th April.
Get in touch with us with any questions and we’ll be on hand with our expertise and advice.
