IR35 : The Importance of IR35 Insurance


IR35, Career, Business, Change & Transformation...

​Orbis recently hosted an event around IR35 in partnership with Kingsbridge Contractor Services. We met with Kate Robinson from Kingsbridge to speak about the importance of IR35 Insurance in more detail.

If you’re a contractor and you haven’t already started preparing for the introduction of the off-payroll working rules into the private sector, now is the time. Purchasing business insurance (if you haven’t already) will play a key role in this preparation. 

The intermediaries legislation - more commonly known as IR35 - is a piece of anti-avoidance tax legislation introduced in 2000 to combat what HMRC call “disguised employees”. It applies to contractors who supply their services through a limited company – referred to by HMRC as a Personal Service Company ‘PSC’. It requires the PSC to pay equivalent employment tax to directly engaged employees i.e. PAYE tax and NIC if the reality of the work is akin to employment. But what exactly does it look like to be outside the realm of traditional employment norms?

To work outside of IR35 the relationship between contractor and client must not 'look and feel' like employment. If it does, it is likely IR35 will apply. It is imperative to be able to demonstrate the differences between an independent contractor and ‘regular’ employees of a business.

Having the correct cover in place is one such demonstrable difference. Holding business insurance serves as a key IR35 indicator for 'being in business on your own account' and therefore working outside of IR35. Holding business insurance is not a requirement for an employee as they would be covered by their employer’s own insurance provisions. A contractor does not have this luxury. Therefore, the holding of insurance and the concurrent implication that the contractor is solely responsible for the consequences of their actions demonstrate a clear distinction between contractor and employee. 

There are also some other factors to consider. The fact that you, as the contractor, have had to purchase insurance cover demonstrates a financial obligation and a responsibility to protect your interests. The taking on or presence of discernible financial risk is also a key indicator of working outside IR35. Professional indemnity insurance – a key piece of cover for any contractor - is designed to protect you against claims for negligence (such as providing a service, advice or designs that have caused a loss).

It is worth noting that IR35 isn’t the only reason to make sure you have the right cover in place. There is a fair chance that all contracts within the recruitment supply chain will specify that a level of insurance cover is required. This is not only good practice but will also protect you personally against losses. It is a common misconception that an individual is protected financially if operating through a Limited Company. If you do not have cover in place and have acted recklessly, you can still be personally sued. Insurance cover has many practical and financial benefits, but it also serves as a strong indicator that a contractor is responsible for their own work.

Here at Orbis, we’re working with our clients to obtain Status Determination Statements, a comprehensive statement declaring the status of a contractor’s employment status following an IR35 assessment. We want to ensure all contractors are compliant. We’re creating guides as we gather more information and we’re hosting events, alongside our contractor service partners, to share this information in the run-up to April 2020.

The window of time between now and the IR35 reform in the private sector is growing rapidly smaller. It makes sense to act sooner rather than later.


If you would like more advice, then please contact Joanna Jewitt on 020 3854 0024, or email