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Why it’s imperative for PSC contractors to hold business insurance

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As I am sure you are all aware, the private sector IR35 reforms have been put on hold until April 2021. What contractors must remember, however, is that IR35 has not changed, just who makes the determination, and how payment is then made.

As it stands, it is for the contractor to determine whether or not they are caught by the IR35 legislation.

A key to showing that you are legitimately working outside IR35, is to be able to demonstrate you are operating as a business in your own right and therefore not an employee. Holding business insurance has always been a helpful indicator (not the only one) of being in business on your own account. It clearly demonstrates that you are taking on contractual risks and liabilities as you are taking steps to protect your business.

The taking on of discernible financial risk is a key indicator of working outside IR35 and the fact that professional indemnity insurance is held demonstrates a financial obligation and responsibility to protect your interests.

It’s good business practice to ensure you are taking responsibility for your work and actions, and it protects you should anything unforeseen go wrong. It’s an added bonus if it helps indicate your IR35 status as well.

As part of our compliance process, and a requirement of our contract terms, we ensure that our contractors hold the appropriate level of business insurance, however, it is something every PSC should hold for very clear reasons.