There is a lot of confusion and misunderstanding surrounding CIS insurance and its value in the recruitment sector at the moment. Obviously we would always recommend asking questions, checking the fine print and seeking clarification before relying on an insurance product.
At Exchequer Solutions we have been offering a form of CIS insurance to our agency partners for a while now. The insurance is valuable and offers peace of mind but we are keen to stress that we will only offer this cover for contractors who meet the right criteria.
CIS is a great option for those who qualify but no amount of insurance will cover contractors who simply shouldn’t be on the scheme in the first place.
Our CIS cover will only be offered where
- there is a lack of supervision, direction and control (SDC)
- this is true on the ground and is reflected in the terms of all parties (contracts will need to reflect this under scrutiny)
- these terms are approved by our tax advisors
- the contractor passes a self-employed questionnaire
Only once all of the above is agreed i.e. the end client, the agency, and the contractor all agree that there is no SDC can the insurance be put in place.
It will generally speaking only be available to cover higher skilled/independent contractors. Semi-skilled and unskilled workers cannot be covered unless there is real lack of SDC which would be unusual. It cannot therefore be seen as an alternative to an umbrella scheme for the majority of workers. However CIS is an attractive tax efficient option for those who do meet the criteria and our cover will offer recruiters peace of mind that they won’t face financial penalties over these workers in the future.
Our insurance does cover legal costs, Tax and NI liabilities and HMRC penalties in the event that despite all of the above processes HMRC successfully argue that the contractor should have been subject to PAYE.
If you are interested in finding out more, have questions or would like to discuss your requirements please give us a call and we’ll be happy to talk about it in more detail.
