Business Interruption Terms

 

 

A. Client/Agency Default

 

A1 Business Failure of the Plus Member’s End Client

If the member has a direct contract with an End Client (i.e. no agency involvement) and the End Client suffers insolvency, administration, liquidation or bankruptcy whilst a IPSE Plus Member is engaged on an assignment and as a result that member is not paid for work, which has been verified by the End Client as having been undertaken, and is not subsequently paid by another Party which may take over the administration of that engagement, then the IPSE Plus Member will be entitled to ask IPSE to make a claim on its policy for losses suffered to a maximum of £10,000 (net of VAT).

 

There must be a written contract in place and the End Client must be based in the UK.

The losses will be limited to hours/days worked which the End Client was due to reimburse and will include expenses which can be verified as having been incurred at the request of the End Client, which were due to be reimbursed by the End Client.

 

Claims cannot be made where payments are delayed by the End Client, or where the End Client is disputing the amount due because of failure of the Member to claim for work undertaken.

All reasonable attempts must be made to pursue the debt and seek reimbursement from the End Client and any claim must take into account amounts recovered from the administrators or the courts.

 

A2 Business Failure of the Agency

If an Agency suffers insolvency, administration, liquidation or bankruptcy whilst a IPSE Plus Member is engaged on an assignment and as a result that Member is not paid for work, which has been verified by the End Client as having been undertaken, and is not subsequently paid by another Agency which may take over the administration of that engagement, then the IPSE Plus Member will be entitled to ask IPSE to make a claim on its policy for losses suffered to a maximum of £10,000 (net of VAT).

 

There must be a written contract in place and the Agency must be based in the UK.

The losses will be limited to hours/days worked which the Agency was due to reimburse and will not include expenses that may have been incurred at the request of the End Client, which were due to be reimbursed by the End Client.

 

Claims cannot be made where payments are delayed by the Agency, or where the Agency is disputing the amount due because of failure of the Member to claim for work undertaken.

All reasonable attempts must be made to pursue the debt and seek reimbursement from the Agency and any claim must take into account amounts recovered from the administrators or the courts.

 

 

 

A3 Failure of the Agency to honour contractual arrangements

IPSE’s policy allows a claim to be made on behalf of a IPSE Plus Member for a maximum of £1,000 in the following circumstances:

 

  • There is a written contract in place
  • Where the contracted role is not as described by the Agency and/or contracted for by the member and the member’s contract is terminated by the Agency;
  • The Agency terminates without the required notice period stated in the contract;
  • The Contracted role does not exist or is withdrawn after contract is signed but before the on-site date.

In order for a claim to be made, the contractor must be able to show that the reason for the role being terminated is not as a result of the contractor’s own actions and that there has been a loss of earnings because:

  • Another assignment has been turned down in favour of the engagement which has been terminated prematurely;
  • The replacement assignment is at a lower rate;
  • Costs have been incurred that cannot be reclaimed.

 

 

A4 Agency and Client Default IPSE Aggregate Policy Limits

In addition to the individual claim limits, IPSE’s policy for Agency and Client Default has an aggregate limit of £750,000 to cover all claims made in any one period of insurance with an aggregate limit per individual agency or individual End Client of £150,000.

 

Therefore, if an agency/end client was to fail with 75 IPSE Plus Members facing financial loss, then the maximum pay-out would be £2,000. If the full aggregate limit has been reached, no further claims would be accepted.

 

 

A5 Subrogation (assignment) of the debt

The administration/liquidation process can take quite some considerable time because it isn’t always a straightforward process to be able recover the value of any assets the failed or failing business may have. Indeed, in many cases when an agency defaults, no dividend pay-out results because the administrator/liquidator is unable to recover sufficient from the agency’s assets and debtors to make any payments to the creditors.

 

As a result, many members may not be in a position to wait until the due process has been completed, and therefore we are pleased to offer members the opportunity to receive the insurance recovery at the earliest possible moment. This is termed as ‘subrogation’.

 

There is no requirement for a member to subrogate the debt, and members should be aware that there is an administration charge associated with subrogation. The process which will allow Abbey Tax to meet the claim at the earliest opportunity is as follows:

 

  • Complete the claim form and if you would like to subrogate the debt, Abbey Tax can provide the member with suggested wording for a subrogation letter.
  • Upon receipt of this letter, Abbey Tax will forward it to the administrator/liquidator to seek confirmation that the Member has a valid claim against the agency and requesting the liquidator’s agreement to assign the part of the debt being claimed by the Member from Abbey Tax.
  • Once Abbey Tax receives confirmation of the debt and assignment of the value of the claim by the administrator to Abbey Tax, then this amount can be paid to the Member's company.
  • In the event that the administrator collects sufficient funds to make a dividend pay-out, then Abbey Tax, having paid out the full value of the claim, will receive the dividend paid relative to the amount already paid.

An example might best explain the process. Let us assume that the total outstanding debt is £15,000 and the Member is claiming the full £10,000 from Abbey Tax.

 

The administrator is able to pay 10 pence in the pound (i.e. total debts of the agency are, say, £1m, but the liquidator only recovers a £100K which he can distribute to the creditors).  

 

Abbey Tax would therefore receive £1,000 on the debt subrogated to it; the member will receive £500 on the balance of £5,000 of the remaining debt in addition to the £10,000 already received as paid out earlier by Abbey Tax.

 

Abbey Tax does, however, have a duty to protect Insurers’ interests and to ensure that no claimant receives more than they would have, had the insurance not been in place. It would therefore be necessary for the relevant proportion of the debt to be subrogated to Abbey Tax. However, by subrogating, as the above example shows, the member could be disadvantaged.

 

If we use the example of the £15,000 debt, but the member waits until the end of the process, they would receive £1,500 (10% of the total debt), plus the £10,000 insurance claim i.e. £11,500 in total.

 

If the subrogation option is selected, the member will receive £10,000 now, but only £500 (10% of the £5,000 balance) at the end i.e. £10,500. (There will be other scenarios where this difference could be even more significant.)

 

Therefore where subrogation has been the member’s chosen route and there is a dividend pay-out as outlined above, Abbey Tax would pay over the additional amount less a £250 administration fee which represents a charge for early payment.

 

 

B. Enquiry Interruption

IPSE’s policy includes Enquiry Interruption Cover for IPSE Plus Members whose fee earners are taken away from the business to attend visits with HMRC and/or the Designated Agent (likely to be a consultant from Abbey Tax or Accountax).

  • Insurers agree to indemnify IPSE for claims made on its policy in connection with loss of earnings by members as a result of a Designated Member (or Designated Member’s employee)  to be in attendance for meetings with or visits by HMRC and/or meetings with the Designated Agent during the course of an enquiry – where required to do so by the Designated Agent.

Examples of meetings will include a meeting at HMRC’s offices, meeting with the Designated Agent to prepare for and attend a Tribunal. (This is not intended to be an exhaustive list).

  • Enquiry Interruption Cover is linked to the Plus member’s daily rate, but limited to a maximum of £500 per day. The visit/meeting must be requested or authorised by the Designated Agent.
  • In order to arrive at the daily amount payable, the Member will provide details of the length and value of the current engagement from which it will be possible to calculate a daily rate.

 

C. Extended Absence

Where the Plus Member has made a valid claim on the IPSE’s PEI Policy, IPSE’s Business Interruption Policy also provides Extended Absence Cover for IPSE Plus Members in respect of fee earners who are absent from the business for three weeks or more due to an unplanned illness or operation, whilst in an engagement which commenced a minimum of four weeks prior to any unplanned absence due to ill health, as certified by a doctor or hospital (i.e. any period of self-certification does not form part of the absence period).

 

IPSE’s policy will make a single payment of £2,000 to the Member’s business in respect of the first three full weeks that a Member is certified as being unfit to work by a doctor or hospital.

 

The policy will not pay where the member is absent due to a planned operation, medical procedure or other scheduled absence arranged before the contract has commenced or the individual has taken out IPSE Plus membership. The policy will not pay where the member is absent due to a planned operation, which includes an operation/procedure anticipated as part of ongoing treatment but not yet scheduled, a medical procedure or other scheduled absence arranged before the contract has commenced or the individual became an IPSE Plus member.

 

Please note that for all of the above claims, there is a “Waiting Period” of 60 Days from the date from which a Member joins, or upgrades to Plus membership, during which a claim will not be accepted.  Any losses arising before the commencement of or during the Waiting Period will not be accepted.

 

 

D. Jury Service

IPSE’s policy provides cover for Jury Service to all IPSE Plus Members and their employees and is available on the following basis:

  • The Plus Member was a Plus Member at the time of the original summons (i.e. a claim will not be accepted if the member joins on the basis of, or upgrades to Plus membership, after the initial summons but before the actual attendance date).
  • Insurers agree to indemnify IPSE for claims made on its policy in connection with loss of earnings by members as a result of Jury Service providing the court requires the Designated Member (or Designated Member’s employee) to be in attendance or requires the Designated Member to be available on specified days.
  • The Jury Service Allowance will be limited to a maximum of 10 days at £500 per day less a deduction of any amount recovered from the relevant court.
  • In order to arrive at the daily amount payable, the Member will provide details of the length and value of the current engagement from which it will be possible to calculate a daily rate.

 

 

01.01.18