IR35 enquiry insurance: cover for status disputes
Why status enquiries are so fee-heavy
Most tax enquiries argue about numbers. Status enquiries argue about facts and their characterisation: whether an engagement amounts to employment or self-employment, whether IR35 applies to a contractor’s company, whether a subcontractor is properly treated under CIS. That makes them slow and document-heavy. The relevant evidence is spread across contracts, emails, working practices and the recollections of the people involved, and the legal tests — control, personal service and substitution, mutuality of obligation, being in business on your own account — are applied to that whole picture rather than to a single figure in a return. Assembling and arguing that picture is skilled, time-consuming professional work, and it is repeated at every round of correspondence.
Status disputes also have long tails. They can cover several years of engagements at once, and positions tend to be contested rather than conceded, because the amounts that turn on status — PAYE, NIC, and the knock-on effects across years — are significant for both sides.
Who is exposed
Contractors and consultants working through their own limited companies remain in scope wherever they are responsible for their own status conclusions, and are in the front line of any dispute about engagements where the client’s determination is challenged or the off-payroll rules do not apply. Agencies and end clients carry exposure under the off-payroll working rules, where status determinations they make can be tested. Any firm using subcontractors — construction being the obvious case via CIS, but the issue is not confined to construction — can face enquiries into whether the people it pays gross are genuinely self-employed. If you are unsure where your own engagements sit, that is a question for your accountant or status adviser: this page is general information, not advice on your status.
What the cover pays for
The Solar Protect cover includes IR35, Employment Status and CIS enquiries and disputes among its insured events. What that buys, practically, is the defence: your own accountant’s fees for handling HMRC’s questions, assembling the factual record, arguing the technical position and carrying the dispute through its correspondence and meetings — up to £100,000 of fees, with no excess. Two honest caveats belong alongside that. The policy responds on the basis that your affairs were presented honestly — deliberate fraud is not insurable. And no policy pays the tax or NIC that would follow from losing a status argument, and none decides the argument for you: it funds the professional defence, it does not promise the outcome.
Status risk sits alongside your other professional covers
For the contractors and consultancies we already arrange professional indemnity for — IT contractors, developers, engineers, management consultants — fee protection is a natural companion policy. PI responds when a client alleges your work caused them loss; fee protection responds when HMRC questions your tax position. They cover different rooms of the same house, and neither does the other’s job. Contractors can quote and buy fee protection online in minutes through Solar Protect; if your accountant runs a fee protection scheme, joining through the practice works too.
Practical points before an enquiry ever starts
Status defence is evidence defence. Contracts that reflect reality, records of how engagements actually ran, and consistency between what was signed and what was done are what a defence is built from — and they are also what keeps defence fees proportionate, because time spent reconstructing facts is the most expensive kind. Your accountant can tell you what is worth keeping; the policy means that when the letter does arrive, the decision to defend properly is not a financial one.
Frequently asked questions
Does this cover pay the tax and NIC if I lose an IR35 dispute?
No. It pays your accountant's fees for defending the enquiry or dispute, up to £100,000 with no excess. Tax and NIC found to be due are never insurable, and no policy should promise you a particular outcome.
I'm an IT contractor — is IR35 cover included or an extra?
IR35, Employment Status and CIS enquiries and disputes are among the insured events of the Solar Protect fee protection cover, alongside Corporation Tax, Income Tax, VAT and PAYE/NIC enquiries.
My client determines my status under the off-payroll rules — am I still exposed?
Status questions can still reach you: determinations can be disputed, not all engagements fall under the off-payroll rules, and enquiries can look at earlier years. Whether and how your own engagements are exposed is a question for your accountant.
Does it cover CIS disputes for construction firms?
Yes — CIS enquiries and disputes are named insured events, which matters for any firm paying subcontractors, in construction or otherwise.
Can I use the status specialist my accountant works with?
The cover is built around using your own accountant. How your accountant staffs the defence within the policy's terms is worth checking against the wording before you buy.
Is this the same as professional indemnity insurance?
No. PI responds to claims by clients that your work caused them loss; fee protection responds to HMRC enquiries into your tax affairs. Contractors typically need both, and they don't overlap.
Solar Protect is a trading style of Solar Insurance Services (Medway) Limited, authorised and regulated by the Financial Conduct Authority (FRN 459582), and is part of the same group as Apex Insurance Brokers.
Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority (FRN 724952). This page is general information, not advice on a specific policy.