1. What is FO35
   
   
2. What are the benefits of FO35?
   
   
3. Who can buy FO35?
   
   
4. Who has developed FO35?
   
   
5. What cover does the insurance provide?
   
   
6. How does FO35 differ from any of the other IR35 insurances and services on the market
   
   
7. Why is it important to cover the cost of penalties?
   
   
8. What happens if there are case law changes or other changes which affect the manual?
   
   
9. When does the cover start?

10. What are the main exclusions from the cover?
    
    
11. When my business buys FO35 will I be covered if the investigation starts with my personal self-assessment return?
    
    
12. How do I buy FO35?

13. I see that Shout99 is now offering a contract review service. Do you have to have your contracts reviewed first in order to qualify for FO35?

14. Insurances like FO35 usually have conditions such as having to meet some form of "reasonable prospects" criteria before the insurance will cover a claim. What condition does FO35 set regarding "reasonable prospects"?

15. Shout99 has mentioned recently the problems some small businesses are having where the Revenue are trying to claim that, under section 660 ICTA1988, dividends received by a non working spouse are the income of the working shareholder. Will FO35 cover the professional costs of fighting such a claim?

16. Having purchased FO35, is it possible to get advice about a specific contract I am being asked to sign?

    
    

17. I have previously taken out the TLC35 insurance provided by Qdos but now that I have the FO35, does this give me the same cover, or is it advisable to take out further TLC35 cover for the next tax year?

18. Does FO35 cover professional costs and penalties due to PAYE reviews?

19. How long does the FO35 cover last for?

20. Does the insurance consider interest on taxes due as a result of the assessment a penalty?

21. My company has ceased to trade and has closed down. Can I still buy FO35 to protect it against investigation of past years?
    
22. I have been advised by the Revenue that they want to carry out an employer’s compliance review (‘PAYE audit’) of my company. If I buy FO35 now will I still be covered by the insurance if the review develops into an investigation?

23. Does this package require me to use a new Limited Company and does it require me to operate a manual or online accounting system?.

24. If I operate partly through a Limited company and partly as a sole trader through a Limited Liability Partnership where I am working with others, do I need one insurance policy or two?

1. What is FO35

It stands for Freelancers Outside IR35 and is a unique system which removes the uncertainty and risk surrounding IR35. It provides freelancers with the information, professional advice and support; and insurance protection they need to demonstrate with confidence that they are outside IR35 - and not take the chance of penalties.

Freelancers Outside IR35 (FO35) comprises:

• a manual which shows how to take 'reasonable care' to demonstrate you are outside IR35;
  
• practical help on how to record and maintain this information;
  
• guidance on how you can confidently determine your own IR35 status including
  
• simple decision trees;
  
• model contracts which are outside IR35;
  
• 12 months tax enquiry insurance;
  
• professional representation if your case goes to the Special or General Commissioners;
  
• 12 months penalty insurance - so even if you are later found to be inside IR35,
  
• you will be guaranteed there will be no penalties;
  
• a tax helpline operated by Qdos Consulting Limited;
  
• a dedicated area of the Shout99.com website to keep you up-to-date with developments (www.shout99.com);
  
• sample letters from the Inland Revenue; explanations of what they mean - and guidance on what to do if you get one.

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2. What are the benefits of FO35?

• It removes the uncertainty associated with IR35.
  
• It provides all the information needed to demonstrate you have taken reasonable steps to show you are outside IR35.
  
• It provides you with professional assistance in the event of a tax investigation by the Revenue or a VAT investigation by Customs and Excise.
  
• It provides you with insurance against penalties - it is the risk of high penalties which has proved to be one of the biggest deterrents to 'borderline' freelancers who are unsure of their status.

FO35 provides freelancers with all they need to be able to operate confidently outside IR35.

For a cost of £115.00 (incl p&p), FO35 will provide freelancers with the confidence and security which will help them to save thousands of pounds each year.

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3. Who can buy FO35?

FO35 is available to any freelancers who want to operate outside IR35 without the risk of penalties.

It is available exclusively through Shout99, the UK's largest network of freelancers. Registration to Shout99 is free and easy to complete online. There is no initial membership or joining fee to purchase this product.

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4. Who has developed FO35?

This unique system has been compiled by some of the country's leading experts in IR35. The concept was developed by Shout99, the UK's largest freelancer network - and the first site (through its predecessor engineerjob.com) to campaign against IR35 in March 1999 and against fast track visas. It has consistently been at the fore-front of campaigning issues on behalf of freelancers and has the most up-to-date news and information resource for the freelancer community. Shout99 and Qdos will be overseeing the development of FO35 and regularly updating the system for users.

FO35 is supported by tax consultants Qdos who has had unparalleled success in dealing with IR35 status cases, having saved freelancers they have represented nearly £6.0 million to date. Qdos will be providing professional expertise, support and representation to freelancers and has also put in place the tax enquiry insurance, the penalty insurance and the tax help-line.

Groupama Insurances is one of the UK's leading general insurers and a wholly owned subsidiary of one of Europe's most powerful financial groups. Groupama Insurances currently insures over 1,000,000 individuals and a growing number of businesses and affinity groups. From products such as car and home insurance to healthcare and comprehensive commercial covers
for the smaller business sector, the UK group has the experience and expertise to offer high quality insurance protection with service to match.

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5. What cover does the insurance provide?

The insurance is three fold.

1. If you are chosen for an aspect enquiry or a tax or VAT investigation, the insurance will cover you for the professional costs of Qdos dealing with an Inland Revenue aspect enquiry or investigation or Customs and Excise VAT dispute;


2. If your case is taken to the Special or General Commissioners, your legal fees and the cost of representing you will be covered;


3. Then, if at the end of the investigation you are charged with penalties, you are covered against any penalties that may arise as a result of such an investigation - subject to an overall limit on costs and penalties of £50,000 for most investigations and £5000 for Special Compliance Office Investigations.

Provided you follow the procedure in the manual, your Revenue investigation needs will be covered and you will never have to worry about punitive penalties if the Revenue says you got it wrong.

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6. How does the FO35 system differ from any of the other IR35 insurances and services on the market?

FO35 is very different to anything else. It is an all-round package which provides everything you need to stay outside IR35 without having to worry about the risk of penalties.

FO35 is a complete freelancer operating system.

1. FO35 provides detailed guidance on the information and evidence you need to maintain in order to be able to easily demonstrate that yours is a proper business, that you are in business on your own account and that you operate in a way that is very different to that of a disguised or temporary employee. Not only does it provide the guidance but it also provides practical help on how to record and maintain this information.


2. It gives you the tools to decide to be outside IR35 without recourse to expensive legal advise or professional contract review.


3. It gives you access to Model Contracts which are outside IR35.


4. The tax enquiry insurance covers you for the costs of dealing with an investigation; provides you with professional representation and covers your legal fees if your case goes to the Special or General Commissioners.


5. The penalty insurance covers you against penalties that might arise if the Revenue successfully challenges your IR35 status.


6. The whole package costs £97 plus Postage and Packing and can potentially save you thousands.

1. Charge a membership fee to join an organisation before you can buy it - registration on Shout99 is free and easy;


2. Reveal your name and address to any third party. You are not a 'shareholder' in an organisation, whose personal details can be obtained by anyone who pays a small fee;


3. Make you pay for a contract review before the cover is valid;


4. Leave you facing the charges for penalties if the Revenue wins.

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7. Why is it important to cover the cost of penalties?

If the Revenue challenges successfully, penalties can be as high as 100 per
cent of the additional Tax and NIC.

Although penalties at this level are unlikely, it is a huge risk - and for many freelancers it is too great a risk to take. The cost of uncertainty surrounding this risk is often the deciding factor in 'ticking the inside IR35 box', even though they believe they are a genuine business.

Even at a reduced level of say 20 per cent, penalties can mount up when the amount of additional tax and NIC in an IR35 case can often be £10,000 or more per tax year.

This protection against the costs of penalties, mean that freelancers have the peace of mind to take decisions about their status based upon the facts as they know them to be, rather than the fear of a swingeing penalty.

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8. What happens if there are case law or other changes which affect the manual?

Our team of experts is constantly reviewing changing case law and Revenue
changes. The FO35 system manual will be updated regularly and upgrades
will be sent out in the post at no further charge and alerts will be put on the dedicated area of the website.

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9. When does the cover start?

It starts once you apply and pay. If you pay by credit card then you are covered as soon as the payment is accepted - subject to the usual exclusions about pre-existing investigations. If you pay by cheque Qdos will issue the documentation and cover as soon as the cheque is received and cleared.

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10. What are the main exclusions from the cover?

The main exclusions are:

1. Professional fees incurred before you notify the insurers of the investigation.


2. An investigation that you were aware of when you bought FO35 or which relates to an inspection that took place immediately before buying the system.


3. Fees relating to a routine inspection such as a PAYE audit or a routine VAT inspection. The insurance will cover you if the Revenue or Customs and Excise issue a notice of dissatisfaction following such a routine inspection, although routine PAYE audits can be covered under a separate, optional policy.(See here:
   FO35 PAYE cover


4. Matters arising from a tax return which was not submitted within the statutory time limits.


5. Any enquiry following the correction of a self-assessment return where the error requiring rectification was due to the insured or policyholders deliberate act or where the insured refuses the Inland Revenue's reasonable request for rectification of the self-assessment return, unless the correction of the return was instigated under Qdos
   Consulting's 'Out of the Box' scheme, in which case FO35 cover will apply.


6. Any tax and NIC liabilities arising from an investigation.

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11. When my business buys FO35 will I be covered if the investigation starts with my personal self-assessment return?

Yes, the insurance will cover you as well as your business as any investigation into your tax return will undoubtedly affect your business as well.

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12. How do I buy FO35?

You can buy FO35:

• On-line by Credit Card (Not AMEX) by completing this online order form (This is the fastest way of being on-cover).
  or;
  
• By cheque by completing this online order form
  or;
  
• By telephone by calling the FO35 sales line on 01455 850000 and giving your credit card details (not AMEX) over the phone.

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13. I see that Shout99 is now offering a contract review service. Do you have to have your contracts reviewed first in order to qualify for FO35?

FO35 does not require you to have your contracts reviewed in order to qualify for the insurance cover. Part of the aim of FO35 is to give you the knowledge and tools to enable you to assess your own status without needing to incur the costs of having contracts reviewed by an expert.

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14. Insurances like FO35 usually have conditions such as having to meet some form of reasonable prospect criteria before the insurance will cover a claim. What condition does FO35 set regarding reasonable prospect?

In the case of IR35 disputes "reasonable prospects" implies that the freelancer had valid grounds for being uncertain as to whether they passed or failed the so-called "IR35 Tests". Qdos has confirmed that if you follow the guidance on contracts and status contained within FO35 then you would be adjudged to have "reasonable prospects" of succcess.

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15. Shout99 has mentioned recently the problems some small businesses are having where the Revenue are trying to claim that, under section 660 ICTA1988, dividends received by a non working spouse are the income of the working shareholder. Will FO35 cover the professional costs of fighting such a claim?

Qdos has confirmed that a S660 challenge to a holder of FO35 would be covered. FO35 covers the business and its directors and even if the investigation started with a query against a non director spouse, FO35 would kick in if the impact would be to tax the director spouse.

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16. Having purchased FO35, is it possible to get advice about a specific contract I am being asked to sign?

You should use the tax helpline that Qdos provide under the FO35 insurance - the telephone number is in the insurance section of FO35.

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17. I have previously taken out the TLC35 insurance provided by Qdos but now that I have the FO35, does this give me the same cover, or is it advisable to take out further TLC35 cover for the next tax year?

Qdos’s TLC35 requires you to have your contracts reviewed by Qdos. If they consider that you are outside IR35 then they will sell you the TLC policy.

The cost is higher than FO35 (typically about £325+ for the policy plus a contract review) but it is a more comprehensive insurance policy. In addition to the tax enquiry and penalty cover that FO35 provides, TLC also covers the cost of any additional tax and NIC that may be payable if Qdos are unsuccessful in defending your status.

Apart from being cheaper FO35 also provides guidance on IR35 and on how to assess your own status without needing to incur contract review costs, and it provides a system for documenting and recording your business’s activities.. But it does not cover the additional tax and NIC that may be payable.

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18. Does FO35 cover professional costs and penalties due to PAYE employer compliance reviews (‘PAYE audits’)??

The answer is "yes and no"! FO35 does not cover the costs of having professional advice to deal with a routine Revenue employer's compliance review . (‘PAYE audit’). Accountants advise us that, in many cases, they will assist a client with such a review for only a nominal charge as they see it as part of their overall client service. However, for those FO35 users who would still like the added comfort of having Qdos Consulting, who are experts in this area, handle their employer compliance review. (See here:
FO35 PAYE cover for details)

If following a PAYE audit , the Revenue issue a letter of dissatisfaction which sets out matters where they think your business has failed to comply with PAYE and NIC legislation, then the FO35 tax enquiry insurance will cover the professional costs of dealing with that matter and any penalties that may arise should Qdos be unsuccessful in defending you.
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19. How long does the FO35 cover last for?

The FO35 insurance runs for a year, commencing from the date on which payment is received by Qdos.

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20. Does the insurance consider interest on taxes due as a result of the assessment a penalty?

No – interest is not part of the penalty and is not covered by this policy.back to top

21. My company has ceased to trade and has closed down. Can I still buy FO35 to protect it against investigation of past years?

The insurance is bought by the business. If the business is still in being, albeit that it might be dormant, then it can buy FO35 and be covered by the insurance – provided that you are prepared and able to reconstruct the FO35 system records for any period that comes under investigation. However, if the business has closed down and been struck off then it no longer exists and it cannot buy FO35. However, you can continue to cover a business after it has closed down provided FO35 was first purchased before the business closes and provided there are no gaps in the renewals.
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22. I have been advised by the Revenue that they want to carry out an employer’s compliance review (‘PAYE audit’) of my company. If I buy FO35 now will I still be covered by the insurance if the review develops into an investigation?

Unfortunately no. Notification of an employer’s compliance review counts as an existing situation that would be excluded. If the review takes place and no issues are raised then you will covered by the insurance for any new investigation.

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23. Does this package require me to use a new Limited Company and does it require me to operate a manual or online accounting system?.

FO35 does not assume or require that you set up a new company. Whether you use an on-line accountancy service or a more traditional one is up to you.

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24. If I operate partly through a Limited company and partly as a sole trader through a Limited Liability Partnership where I am working with others, do I need one insurance policy or two?

In effect you have two businesses. This doubles the risks and you will therefore need to buy FO35 for both businesses is you want both to be covered.

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For more information or to purchase FO35, please see Freelancers Outside IR35 (FO35).