Elsewhere on this site we have described what fee protection is, and given details of the cover that is available.
If you are providing services through a limited company and there is any risk whatsoever that HMRC could argue that you are in disguised employment, then it is imperative that you buy fee protection cover.
The maths are simple.
If you operate through a limited company, then your business is taxed at 20% and you probably avoid or minimise personal tax. If HMRC manage to successfully argue that you are in disguised employment, then even with basic rate tax and national insurance, the tax yield is 45.6%, and they can back-date their claim for seven years It is in HMRC’s interest to pursue you, and fee protection cover will mean that you can afford to have your case argued.
