- Are there any ongoing obligations to ensure SDC is not present and the policy cover remains effective?
What does the policy cover?
The policy provides cover for professional fees (of an accountant or other appropriately qualified individual) to represent the policyholder in the event that they are subject to an enquiry by HMRC under Section 339A of the Income Tax (Earnings and Pensions) Act 2003, Chapter 2, Part 5 (travel and subsistence).
In the event that HMRC find that a particular worker is caught by the regulations, and the policyholder’s position cannot be defended, the policy will provide cover for any additional taxes, National Insurance, interest, and penalties that may be imposed upon the policyholder by HMRC.
Important note: The policy will only provide cover for workers who complete and pass the online test at SDCtesting.co.uk. The policy will not cover claims that arise in relation to workers who have not completed and passed the online test.
What is the policy’s limit of indemnity?
The policy will provide cover of up to £50,000 for any one claim and in the annual aggregate (the total amount payable by the insurer in relation to all claims made during any one policy period, being each calendar year starting from the date of inception of the policy) in relation to professional fees, and up to £5,000 for any one claim and in the aggregate per worker in relation to taxes, National Insurance, interest and penalties.
Who is the insured party – the umbrella or the worker?
Whilst the policy will only provide cover for workers who complete and pass the online test, any HMRC enquiry under Section 339A will be made into the umbrella company, therefore, the policy is issued in the name of the umbrella and, for clarity, identifies the workers as additional insureds.
Who administers and underwrites the policy?
The policy is administered by Qdos Broker & Underwriting Services Limited and is underwritten by UK General Insurance Limited on behalf of Great Lakes Reinsurance (UK) SE.
Qdos Broker & Underwriting Services Limited and UK General Insurance Limited are authorised and regulated by the Financial Conduct Authority. Great Lakes Reinsurance (UK) SE is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.
How is the premium calculated?
If the umbrella chooses to take out cover, a monthly premium will be calculated based on the number of workers who complete and pass the online test, charged at a rate per worker per month, for the duration of each eligible workers’ engagement.
How do I arrange cover?
To begin, please register with SDCTesting.co.uk: Click here to register with SDC Testing
How do I notify a claim?
Initial notification of a claim must be made in writing by first class post or facsimile or e-mail to:
Qdos Broker & Underwriting Services Limited
Troon Way Business Centre
Telephone: 01455 852100 (calls charged at local rate)
Who represents me in the event of an enquiry?
In the event of an enquiry a consultant from Qdos’ panel will be appointed to represent the policyholder in their dealings with HMRC. The policyholder may ask the insurer to consider a request to use a specific consultant (e.g. their own professional advisers) – such a request will be considered by the insurer provided the nominated consultant is suitably qualified and experienced, and is able to agree to Qdos’ terms of appointment to handle the claim.
What happens if a contractor purposefully provides incorrect information in order to pass the test?
Policies that cover representation costs for tax and legal disputes typically carry a clause which excludes indemnity for professional fees where a successful outcome is unlikely (less than a 50/50 chance). This clause is found within the insurance policy, however, it is largely negated by the online assessment carried out via SDCtesting.co.uk – i.e. if a worker has satisfied this test, there should be a greater than 50% prospect of the enquiry being successfully defended.
In the unlikely event that a worker passes the online assessment on SDCtesting.co.uk, but the relevant enquiry is not deemed to have prospects of success, the policy will still indemnify the policyholder for the additional tax, National Insurance, interest and/or penalties incurred as a result of conceding the case (subject to the policy’s terms and conditions).
Is there an excess on the policy?
No, the policy is not subject to an excess.
At what point should workers complete the online test, in order for the insurance cover to apply?
The assessment should ideally be completed by the worker as soon as possible after they start a contract, once they know the working arrangements to which they will be subjected under the engagement.
If a worker passes the online assessment before their contract commences their working arrangements must be reassessed within four weeks from the commencement date of their contract in order for cover to remain in place. If the worker completes the online assessment before their contract start date and does not complete a reassessment within four weeks of that date, or fails the reassessment, no cover will be provided in relation to that worker.
Are there any ongoing obligations to ensure SDC is not present and the policy cover remains effective?
- Notify Qdos if you become aware of a change in the terms of a worker’s engagement at any time whilst the policy is in force;
- Notify Qdos when a worker covered by the policy enters into a new engagement;
- Ensure that accurate information is provided to Qdos at all times, including details of workers’ engagements, and any reduction or extension to the duration of the workers’ engagement. Failure to notify changes to the duration of an engagement could result in an overpayment or underpayment of premium; and,
- Abide by the terms and conditions detailed in the policy document, a copy of which is available on request.
What are my options if I choose not to insure?
If you choose not to insure you will still be able to use SDCtesting.co.uk to determine whether your workers should be allowed to claim travel and subsistence expenses.
In the event that you are subject to an enquiry by HMRC we would recommend that you seek advice from Qdos, or from another appropriately qualified consultant.