Contractor- The Risks

As an independent contractor, it is crucial that you are in business on your own account and like any other business there are risks. It is important that you protect your businesses interests in any way possible.

As a limited company contractor, you are vulnerable to a legislation of tax known as ‘IR35’. Qdos offer a range of compliance checks to ensure that you are working outside of IR35, including contract reviews, working practices reviews and for those working in the public sector as an independent contractor, we have our Public Sector IR35 Solution Pack, which has been extremely successful.

We also have two insurance products to protect you against a potential HMRC IR35 investigation. Our Freelancer Tax Protection will cover you for the costs of defending you in an IR35 enquiry. Our most comprehensive tax insurance is our revolutionary TLC35 Insurance; this not only covers the costs of defending you, it also covers you for any potential tax liabilities you may owe as a result of an IR35 investigation. As part of our service you are entitled to free compliance checks such as contract assessments and working practices reviews with the purchase of one of our tax insurances.

It is worth noting that should you be unfortunate enough to be subject to an IR35 investigation, the fact that you have taken steps to ensure that you are working outside of IR35 (i.e having compliance checks) will be taken into account by HMRC.

You should also be mindful of the other financial risks involved with being in business on your own account. As a result of a negligent act or omission, your client may try to bring action against you as a result of being in breach of professional duty, the costs of this can be extremely high, therefore any business should consider their exposure to such eventualities. Professional Indemnity Insurance will deal with claims of this nature, while Public Liability Insurance deals with claims relating to bodily injury or property damage to the public.

Employers Liability Insurance will cover claims in the event of injury or death to an employee. You may also be legally obliged to purchase Employers Liability Insurance should you employee anyone.

Carrying this type of business insurances is frequently a contractual stipulation and it is recommended you consult with your agency or end client if you are in any doubt as to your requirement to take out cover.

Should you be a contractor working in the public sector, it is worth noting that being a Professional Indemnity Insurance policyholder is worth 2 points on your business entity test.

By:Sam Greenwell

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