IR35 insurance – Who needs it?

HMRC has issued its latest update on the IR35 Off Payroll Private Sector Reforms, all but confirming that the reforms will come into effect on the 6th April 2021.

HMRC has confirmed what it describes as a soft landing for affected parties for the first 12 months following implementation, emphasising compliance and support. In essence, this means that HMRC will take a lenient approach with parties where they believe mistakes made during the process are genuine.

Whilst this represents an olive branch from HMRC to assist with the impact of the IR35 private sector reforms, many large scale engagers, in the financial sector, for example, have still adopted an ultra-cautious approach and made policy statements ruling out the use of personal service companies.

So how can insurance play a part in changing this thought process?

Risk-averse to new responsibilities

With the reforms shifting responsibility for IR35 determinations from contractor to engager, many engagers have taken an ultra-cautious approach in response.

Even though the immediate financial liability will sit with the fee payer (possibly the engager but more likely the agency), the reforms clearly state that the engager retains responsibility for taking reasonable care in how they handle the process. Failure to do so could still land liability square at the engagers door.

This stipulation and responsibility seem to have been a step too far for some engagers. Ironically, this is even the case for some of the financial service organisations that provide insurance policies for off-payroll workers against IR35-related investigations.

Compliance and insurance

The challenge for engagers is how this approach will affect their capability to attract and retain the flexible talent they have utilised and relied upon previously.

The consensus suggests that contractors will seek assignments deemed outside of IR35, either with small businesses where the reforms do not apply or medium to large businesses with a fair and reasonable determination process.

The alternative, if a PAYE solution is the only choice, is a significant hike in rates and cost to the engager. Neither of which would seem very appealing propositions due to the potential cost of business lost or reduction in profits.

However, a robust compliance process underpinned with a comprehensive insurance policy could eradicate almost all of the engager’s risk. Indeed, engagers with a robust due diligence process and some qualified, professional support should have little trouble identifying a supply chain and process that includes an insurance provision.

Engaging with fee payers with insurance protection should leave engagers with very little to fear from HMRC’s transfer of debt provisions and everything to gain from a talented contractor workforce keen to provide their services.

IR35 insurance policies can be hard to come by, such is the ambiguity surrounding the legislation. In fact, some insurers are even reluctant to provide cover where the government’s own CEST tool is used to conduct determinations.

Policies will therefore fall into one of two categories. One will be policies that contain weak prospect of success clauses that effectively provide underwriters with an opt-out if they deem the case weak. Engagers should avoid these policies wherever possible.

The others will be policies provided on the strength of the compliance process and will usually include First and Upper-tier tax tribunal representation, cover for previous tax years for up to six years, and cover all defence costs, including liabilities and penalties.

All of which should give engagers confidence and peace of mind that the risk of engaging contractors outside of IR35 is mitigated.

What now?

Our Founder and Director of Workr Compliance, Andrew Webster, recently hosted a webinar with Markel Tax on IR35 insurance. For a complimentary recording of the webinar, please follow the link – https://workrgroup.com/demystifying-off-payroll-working-for-the-entire-contractual-chain-whilst-protecting-your-interests/


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Around IR35 in eighty days

Workr Compliance is an impartial consultancy that provides advice and support on IR35 and the compliant management of a freelance contractor workforce. So, you’ll be right in thinking, what that has to do with a story written in the mid-1800s?

If you’re unfamiliar with the title, Around the World in Eighty Days is an adventure story written by the famous French author, Jules Verne. It was first published in France in 1872 and followed the story of Phileas Fogg, a wealthy, English eccentric from London. Fogg accepts a wager with his friends at the aptly-named Reform Club that he can circumnavigate the world in 80 days.

So what has this got to do with IR35? Well, if your business utilises freelance contractors, you’ve now got less than 80 days before the IR35 legislative reforms take effect in the private sector. And, like Phileas Fogg, who gambled £20,000 (over £2M today), you’ll be taking a substantial financial risk if you fail to prepare appropriately. 

There’s just no way of getting around IR35 — it’s here to stay.

You’ve prepared for the reforms already, haven’t you?

The IR35 reforms were originally due to take effect in April 2020, so many businesses have already taken steps to prepare for the changes. However, there were conflicting and ambiguous views in the lead up to April 2020 with many questioning the strategies implemented by engagers.

Ten months have passed since the original date of the reforms, and the UK has faced the extraordinary challenge of the pandemic since. So, has your plan changed since April 2020? And, how have your business strategies changed in response to the pandemic?

With such considerable costs to the government associated with the pandemic, it seems reasonable to suspect that there will be a focus on all and any legislation relating to tax and tax avoidance.

Engagers and agencies that failed to observe reasonable care guidance or issued mass status determinations or blanket statements will need robust arguments to defend their actions should HMRC investigate. The consequences of not having appropriately prepared could be extremely costly.

Still time to reconsider?

Even though the clock is ticking, there is still time to review in preparation for the reforms.

With the additional pressures caused by the pandemic, engagers must ensure that they minimise their financial risk when the IR35 changes take effect.

Utilising contractors may prove key to completing critical projects, getting strategic objectives back on track or gaining competitive advantage. Those businesses that can demonstrate a fair and objective determination process will most likely stand the best chance of attracting the highest calibre contractors.

For those businesses that may have rushed a process through previously, or relied upon untested software models or off the shelf, vanilla solutions, there is still time to gain peace of mind and confidence that your IR35 plan is the right one for your business.

With the help of some expert guidance, it’s still possible to implement a robust and effective IR35 process that will offer the greatest chance of success with the smallest amount of risk.

Workr Compliance can support you with a quick and effective review of your contractor compliance and process.

With a genuine blend of people, process and technology, we can help develop a solution tailored to your industry requirements. We can help adapt an approach to your business strategies and objectives that is backed by comprehensive insurance and offers genuine and impartial collaboration with all parties in the supply chain.

Unlike Phileas, we’re not prepared to take the gamble.

For further help or advice please contact Andrew Webster, Director, Workr Compliance on 0208 10 60 000


Article by Andy Webster, Workr Compliance, Director


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Switching to an umbrella company can help you take control of your wellbeing

From talking to our contractors in recent months we know managing mental, physical and financial wellbeing throughout the COVID-19 pandemic has been a challenge.

Combine this with the upcoming reform to IR35 and it is no surprise that contractors currently offering their services through a limited company are worried about the potential impact to them and their families.

Many of our clients in this situation have already considered switching to become an umbrella company employee. This could be to better suit their own personal circumstances, a result of IR35 status determinations or agency or end-client stipulated contract requirements.

If you are currently considering your options we wanted to let you know there are numerous benefits to considering umbrella employment and in these uncertain times, they could be even more important to you.

Our service is personalised to your circumstances and focused to promote various areas of wellbeing to help you thrive and be at your best. These include support for your personal health, such as an always-available GP helpline, through to relieving the stress of financial worries by making you feel comfortable and in control of your own financial position.

Personal Health and Wellbeing  

  • 24/7 Private GP helpline, counseling service, prescriptions and mental health support for you and the family
  • Health assessments, specialist referral and access to non NHS health services
  • Online fitness, well-being and personal health classes
  •  £675 cash back per year for dental, optical and other qualifying treatments
  •  Discount gym membership
  •  Personal accident cover insurance

Financial Wellbeing

  • Compliant take-home pay backed by full employment rights including sick pay and maternity/paternity pay and option to roll up or retain holiday pay
  • One continuous employer for mortgage applications and credit
  • Flexible pension contributions via salary sacrifice
  • Access to daily payroll, advance facilities
  • Support with expenses opportunities
  • Professional Indemnity, Public and Employers Liability insurance

We constantly review these offerings to ensure a culture of contractor wellbeing is at the heart of everything we do. We believe this not only contributes towards keeping you healthy, productive, and achieving a positive work-life balance but also helps you engage with your agency, the end client, and our brand.

We understand that each and every umbrella employee is different and our account managers are committed to providing a bespoke service by getting to know you. Whilst our processes and technology help us do the work we do they will never replace these interpersonal relationships we enjoy. Just check out our Trust Pilot and Google Review scores for yourself.

If you are considering switching to umbrella, whatever your situation, we are here to discuss it and make it as easy as possible for you. Simply call us to discuss your needs with and one of our friendly and experienced team will do the rest.


Article by Gareth Murphy, Workr Umbrella, Head of Customer Experience


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COVID-19 Contractor and Freelancer Survey Update

Workr Group CEO, Matt Tyson – COVID-19 Contractor and Freelancer Survey Update

Workr during Coronavirus

  • Workr have been there for our customers throughout the Covid-19 pandemic paying out more than £1.2 million in salary’s since the scheme began offering protection to over 500 of our loyal contractors
  • Despite working from home and with a significantly reduced workforce we have maintained payment for over 3000 of our contractors
  • As the number one contractor solution of choice we boast the highest customer satisfaction ratings in the industry highlighted by our Trust Pilot Score of 4.8/5
  • Our umbrella clients continue to benefit from our cash health plan, health and wellbeing services, discounts, rewards on our dedicated Covid-19 online portal
  • We have continued to highlight the great work our contractors, partners and consultants do with our 20 acts of kindness

Refer-a-friend to Workr here!

The Results of our COVID-19 Contractor and Freelancer Survey

From hours being reduced to projects being cancelled, contractors and freelancers across the board have suffered due to uncertainty in 2020. And, even as lockdown begins to ease, many self-employed individuals are still facing financial hardship.

We decided to take stock of the thoughts and feelings of contractors and freelancers in our community to better understand what they’re going through and provide agencies with some relevant insight. Surveying almost 400 individuals from our database, below represents their circumstances and the effect that COVID-19 has had.

The impact of lockdown on contractors and freelancers

Almost immediately, lockdown had an impact on the availability of work. Of those we surveyed, 77% saw their industry take a hit.



Not only are self-employed individuals harder to identify – it’s also harder to quantify their earnings.

Support came eventually in the form of a grant that would pay 80% of typical earnings up to a cap of £2,500 a month. However, 56% of survey respondents believe the government could have done more. A further 28% felt the government had offered them nothing whatsoever.



When asked about their finances, approximately 40% said that while they were managing, they had serious concerns for the future. Worse still, 24% said they were really struggling with the financial impact of the pandemic.



How the contractor workforce adapted

Of course, a large number of contractors weren’t immediately laid off. In fact, 45% of those we spoke to were working from home. However, for 40% some or all of their contracts had been cancelled.



As a result, it should come as no surprise that 60% of those surveyed have found it more difficult to adjust than they had initially expected.



With that being said though, a combined 39% found the situation either easier than expected – or the same. While many believe there has been a lack of support, our data indicates that clients and contractors have somewhat pulled through.

On top of this, when asked whether or not they think their clients will explore more flexible working arrangements once lockdown is over, 50% said yes – with an additional 33% thinking it was possible.



What the future holds

With a large number of contractors revealing that the current lockdown and economic pressures haven’t harmed them too severely, it’s our opinion that there is cause to be optimistic about the future of contracting.

Yes, 40% of those surveyed believe that they are less likely to find work after the COVID-19 pandemic. However, a combined 57% believe that there will be the same opportunities – if not more.



In fact, of those who had a contract cancelled, over 83% are planning on getting straight back into contracting as soon as they are able to – still preferring it to regular employment.



The consensus of when that would be, or at least when lockdown would end, had the majority (37%) believing that it would be within 60 days. And with additional support being offered to the self-employed, we don’t think it will be long until business as usual.



How Workr can help

While we understand the pressure that contractors and self-employed people are currently facing, we believe that there is a light at the end of the tunnel. From the research we’ve undertaken, evidence suggests the drive for contract work will be even higher than before.

So, to help you seize the opportunities that drive will bring, Workr Group have a range of services to strengthen your agency.  From award-winning umbrella solutions to IR35 support, we can help put your organisation back on the right path while making you the first choice for contractors and freelancers around the country.

Sound good? Get in touch on 0208 10 60 000 or email info@workrgroup.com.