Contractors, as self-employed professionals, require certain safeguards and assurances when starting and sustaining a business future, and this is where insurance and advice specialists provide a much established helping hand. From contractor insurance to tax and legal advice, Contractor insurance companies specialize in many business eventualities that modern contractors face.
Specialized insurance companies can provide a range of products including full IR35 cover and low-cost business insurance (Professional Indemnity, Employers and Public Liability). Their ground breaking online shop system enables customers to browse and purchase products in an 'add to basket formula'. Insurance can be quoted and purchased within a few minutes, with documentation issued instantly.
Contractors are single working professionals that work via their own limited companies. They work from contracts and are hired by companies for certain periods of time (a year, 6 months for example). A contractor is not considered to be an employee, and from this they are faced with both benefits and drawbacks.
The introduction of the prominent IR35 legislation back in April 2000 targeted individuals working through their own companies who, in HMRC's eyes, should be classed as employees of their clients as opposed to contractors. One insurance company boasts a tailor made IR35 insurance called Tax Liability Cover (TLC35) and also have in house specialists that deal with contractors directly as well as experts in contract reviews and assessments.
The IR35 legislation became in affect to tackle 'disguised employees' in the eyes of the tax office. This concept of a disguised employee is what the whole IR35 legislation is based on and targets employees posing as one man limited companies in order to avoid paying the necessary tax of an average employee.
When HMRC conduct an IR35 enquiry they will look at the written terms between a contractor and their client, or more commonly an agency. They will also interrogate the contractor's end client and will scrutinise the actual working practices. Unfortunately most IR35 enquires are hugely protracted, commonly lasting for upwards of 2 years. Contractors have taken the brunt of HMRC's focus over the years, and the nature of the profession means that large numbers of fixed term, high value contracts arise. However, there are contractors who could be subject to IR35 in numerous sectors, and these can range from IT contractors to Oil and Gas workers.
The HMRC is ever increasing their investigations aimed at contractors regarding IR35, and since recent updates such as the business entity tests and public sector updates, specialized Contractor insurance companies have been very busy resolving and aiding IR35 related issues.
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