97% of contractors have opted-out of Agency Regulations

Some insurers refusing IR35 cover for contractors that do not opt-out

According to a survey of more than 3,500 of its contractors by giant group plc, the contractor specialist, 97% have opted-out of the Employment Agency Regulations.

The Employment Agencies Act sets out agenciesí responsibilities and obligations to contractors. These include providing details of the work contractors are required to do prior to engagement and ensuring suitable accommodation is available when contractors are required to work away from home.

Matthew Brown, Managing Director, of giant group comments: Most of giantís contractors seem to think that these regulations are entirely inappropriate to their situation.

They believe that remaining inside the regulations provides contractors with no real benefits, and that not-opting out may actually put them at a competitive disadvantage.

The vast majority of our contractors have made the choice for themselves in the interests of their business.

Some insurers refusing IR35 cover for contractors that do not opt-out

Some insurers are refusing to provide IR35 cover to contractors that do not opt-out of the new Agency Regulations warns giant.

According to giant, some insurers believe that the Inland Revenue could take the view that the regulations impose a degree of control over contractors that suggest an employer-employee relationship.

Mathew Brown comments : The regulations treat contractors more like temps than independent businesses. Insurersí concern is that if contractors chose not to opt-out their status of being in business on their account may be open to attack by the Revenue.

Some insurers are saying they donít want to provide IR35 cover if the risk of the Revenue successfully challenging contractorsí employment status is that much greater.

Matthew Brown adds; Whether these regulations will prove a factor in future IR35 cases remains to be seen.

Contractors should be extremely wary of working without IR35 insurance cover says giant.

Matthew Brown says; Contractors will be taking a risk if they decide to forego their IR35 cover by not opting-out of the regulations.

Trying to decide for yourself whether a contract will pass or fail IR35 simply by the way it is worded is very difficult. The drafting of a contract has to be balanced against the day-to-day reality of the project.

According to giant, if the Inland Revenue establishes that a contractor has failed IR35 the contractor could be liable for PAYE tax and employersí and employeesí National Insurance dating back to the start of the contract. In addition, the contractor could face thousands of pounds worth of fees for professional advice to help fight their case ñ as well as penalties and interest payments.