Once you’re happy with the content of the Status Determination Statement, the next thing you’re going to want to do is get it insured. Why, you ask? Well, consider this. If you’re one of the unlucky few that the HMRC does decide to investigate, then you’re going to have to prove your innocence rather than them trying to prove your guilt. And If they do decide to take you to court, then the fees can quickly spiral.
Having an insured Status Determination Statement in place is the first step to mitigating that risk. When it comes to the type of insurance you need, the two of the commonly chosen options are outlined below:
Comprehensive IR35 insurance: As the name suggests, this is the most comprehensive level of cover you can get for IR35 insurance. It will typically cover the liabilities, interest, legal expenses and penalties that you would be found owing should you eventually lose or have to settle an IR35 enquiry.
Tax Liability Cover: An example of this level of cover is QDOS’s TLC35 insurance, which they state is a: “comprehensive IR35 insurance policy designed with the threat of IR35 in mind. This tax liability insurance policy will protect you in the event of HMRC opening an enquiry into your accounts, whether it is a PAYE compliance review, VAT dispute, IR35 enquiry or a broad range of other HMRC enquiries. In addition, the policy will also cover any tax/NIC liabilities, interest and penalties should you be found ‘caught’ by the IR35 legislation up to the indemnity on your policy schedule.”
It's worth noting that some companies will only insure Status Determination Statements completed by themselves, so be sure to check this prior.
Right, insurance in place, we’re good to go, right? Well, almost.
HMRC can make enquiries into your assignments for up to 6-years after they have finished. And as we mentioned earlier, when they do investigate, you’ll need to prove your innocence rather than they your guilt. That’s why it’s imperative to keep a log of the true practices of your work through assignments and to complete intermittent working practices questionnaire. So, if the HMRC do come knocking, you can send them away with all the proof you’ve kept from each assignment.
This may sound like a lot of extra leg work, but if you’re operating on an outside IR35 basis throughout your assignment then it’s as simple as ticking a few boxes to show that it’s the case throughout.
An example of a True-facts questionnaire is available here: Click
It is also worth noting that if any changes do happen to your working practices whilst on assignment that you should complete a new Status Determination Statement to ensure that you are still working on an outside of IR35 basis.
The key take-away from this is that whilst it’s great to be offered outside IR35 engagements, simply running into them without taking any precautions would be a foolish endeavour. By making sure you complete a fully insured Status Determination Statement and by following up throughout your assignment with checks to make sure that’s still the case you can be confident if the day does every come that you’re subject to an enquiry that you won’t lose any sleep over the matter.
If you have any questions please contact us by email on [email protected], or call 0161 833 1044.
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