Breakfast Briefing Takeaways: So you want to be a Pharma consultant? 25 Apr 2023
When setting up as a pharma consultant, it can be difficult to know how to structure the business and what sort of insurance is required. In PMC’s latest virtual breakfast briefing, PharmaMedic’s Managing Director Dr Malcolm Barratt-Johnson was joined by guest speaker Simon Wyndow, All Med Pro’s Life Sciences insurance manager, to outline the different options that should be considered.
PMC’s latest virtual breakfast briefing, held on 20 April 2023, discussed company structure considerations and insurance implications for anyone thinking of setting up as a pharma consultant.
PharmaMedic’s Managing Director Dr Malcolm Barratt-Johnson was joined by guest speaker Simon Wyndow, All Med Pro’s Life Sciences insurance manager.
Dr Barratt-Johnson opened proceedings with a poll, asking the audience in what types of business they were currently working. The poll found 60% were set up as a limited company, one or two were sole traders, nobody was in a limited liability partnership (LLP) and 36% had not yet set up.
After a disclaimer to say that he was not an expert and was presenting his own opinions, Dr Barratt-Johnson explained the different types of business structure, starting with the pros and cons of being a sole trader. He noted that sole traders were personally liable for any losses, or profits.
He then moved on to limited companies and stated that anyone considering setting up a limited company had to consider whether it was important in their sector to have limited liability. Given the nature of the work and advice of pharma consultants, where if something went wrong it could have serious implications, he pointed out that having limited liability could be sensible. In this case, the business was regarded as a separate entity to the person, protecting personal assets if the business went bust.
Next Dr Barratt-Johnson outlined that a LLP can comprise a partnership of companies or individuals. The main benefit of this setup is that it is easier to expand the number of partners if desired. There are also tax benefits compared to a limited company.
The IR35 legislation was explained, along with its history. Dr Barratt-Johnson said it was important for consultants not to be wrongly designated as ‘inside IR35’ when completing a company’s IR35 questionnaire, as they could be treated as an employee of the company, rather than a separate consultant. This could mean tax and National Insurance would be taken off any payments. He suggested that contracts should be professionally checked for IR35 compliance.
Before the second speaker began, another poll asked the audience how they had arranged their commercial insurance. Over 30% said that they had dealt directly with the insurer via its website, 5% had arranged it through their commercial banking, 18% had used a life sciences specialist insurance broker, while 45% had not yet arranged cover.
Dr Barratt-Johnson said it was critical to have business insurance, before handing over to Simon Wyndow for his presentation.
Simon Wyndow outlined the specialist life science consultancy areas his company’s insurance policies covered. The insurance requirements to be considered included professional indemnity, public liability, employer’s liability, management liability and cyber liability.
He stressed the importance of professional indemnity insurance, which covered legal defence and claims settlement for failings, errors or omissions arising from the consultant’s work. He provided examples that demonstrated how claims could run into hundreds of thousands.
Public liability insurance was advised for any business that undertook work away from the office. It covered the costs of legal defence/actions and compensation. Typically, cover was for the business premises and when the insured was working at a different location. It was for third-party claims for alleged injury or damage to property.
Employer’s liability insurance was needed for any business or person with employees. It provided indemnity to defend and pay claims awarded to employees as a result of injury, disease, illness or death.
Cyber liability was not compulsory, but Simon Wyndow said it was worth considering as it covered data breaches, business interruption, cyber extortion, data and network liability and electronic crime.
Simon ended his presentation with this statement:
“All Med Pro earn an income from insurers when we place business with them. We have arranged a commercial relationship with Malcolm and PMC that, 60 days after a new policy starts, PMC shall be delighted to provide you with a token cash rebate.”
If you missed the event, slides from the presentation are available below.
Anyone with further questions can contact Dr Malcolm Barratt-Johnson via email@example.com and Simon Wyndow at All Med Pro via Tel: 0203 757 6950, website: https://allmedpro.co.uk
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