PCG and Qdos launch TLC35 insurance against IR35 tax liabilities

Contractors faced with the uncertainty surrounding the implementation of the controversial IR35 tax can now insure against the risk that the Inland Revenue will disagree with their assessment of their own company's status.

The Professional Contractors Group, working in conjunction with tax and VAT consultants Qdos, has launched 'Tax Liability Cover 35' (TLC35) a fully insured policy which insures PCG members' tax liabilities and penalties that might arise if they were to be 'caught' under IR35 by an Inland Revenue challenge.

PCG Chairman, Jane Akshar, said: "Insurance is usually taken out to protect people against the unpredictable, such as burglary, illness and accident. It is ironic that the UK's tax system is now so confusing and unpredictable that small businesses have to take out insurance to protect themselves from the consequences of such uncertainty.

"We are pleased to be working together with Qdos to provide contractors with access to this innovative new product. TLC35 will help to provide additional certainty to contractors faced by the highly uncertain business environment created by IR35.

"The recent judicial review helped to clarify the situation for some contractors, but there are still unknown factors and evidence of contradictory decisions which prevent contractors planning with any certainty for the future. Like any insurance policy, this product will help to reduce the zone of uncertainty to a more acceptable level."

PCG members receive a discount of £100 on the cost of the policy - the discount is the equivalent of the subscription fee to the PCG.

Premiums are based on turnover and the discounted cost to PCG members is as follows (inclusive of IPT):

Below £50k turnover = £367.50

£50k - £100k = £393.75

£100 - £150k = £420.00

£150-£200k =£460.00

In order to be eligible for the insurance Qdos will have to review the contractor's contract to agree their status. The contract review price when applying for TLC at the same time is £249+VAT for the first contract and £150+VAT for the subsequent contract.

IR35 was announced in a press notice after the March 1999 Budget. It treats small businesses in the knowledge-based sector as 'disguised employees' for tax and NI purposes, thereby preventing them from operating on similar terms to their larger competitors.

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The Editor

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