August Contractor News Round Up

Your monthly round-up of August’s top contractor news.

Small and Medium enterprise interest in freelancers is growing. The appeal of a short-term solution without having to shell out large employment costs. Hiring freelancers is becoming much more cost-effective for the companies. A report for the second quarter of the years shows that rises in specific industries ranged from 9.2% (logo design) up to a whopping 23% in the accounting sector. This shows that the self-employed are increasingly permanent fixtures in the everyday lives of some businesses. Read more…

Contractors are soon to have a say on their benefits and expenses. A report published by the Office of Tax simplification has identified ‘quick wins’ on how expenses and other tax dispensations can be dealt with. It reports that the P11D form and filling process will be subject to further work as it is known to be widely misunderstood. There will also be a ‘wholesale review’ of the current benefits and expenses.  The chair of the Association of Recruitment consultancies, Adrian Marlow said: “…Simplification of the tax system would probably result in removing the risk for agencies relating to the more extravagant tax avoidance schemes currently on offer. Therefore, this review can only be good for agencies, workers and the recruitment industry in the long run.” Read more…

According to a new jobs report, contractor vacancies in Scotland have reached a 31-month high. The decline in contractor availability paired with billings rising at their slowest pace since March of this year points toward an emerging skills crisis in Scotland. This means that there are just not enough suitably skilled contractors to meet demand. The biggest rise in demand and fall in applicants was seen in Aberdeen and its oil and gas industry, confirming that the industry is booming but the availability of skills is not. Read More…

HMRC have created a new scheme designed to help small companies and contractors/freelancers with their tax disputes. Following a two year trial HMRC have created a national team of trained facilitators to help resolve disputes using the ‘Alternative Dispute Resolution Service’. For a while now the service has helped businesses and individuals in disputes by being the middle man and helping each party understand each other and decide on an agreement.  Richard Summersgill HMRC’s Director of local compliance said: “Evidence has shown that by using the simple ADR service many disputes can be significantly shortened and resolved without recourse to Tribunal.” Read more…

July Contractor News Round Up

Your monthly round-up of July’s top contractor news.

Contractors face new “single compliance process” (SCP) from HMRC

HMRC have been developing SCP which they describe as a single framework in which the majority of future small and medium enterprise business compliance checks will be undertaken, catering for both single tax and cross-tax enquiries. HMRC hopes that SCP will:

  • reduce customer burden by reducing the time taken to complete enquiries
  • focus the intensity of the enquiry so that it is proportionate to the risks identified – concentrating on the rule breakers and potential rule breakers
  • improve the quality and consistency of enquiry work across SME

HMRC ramps up prosecutions for tax evasion among middle class contractors and professionals

In the 12/13 year there were 617 tax evasion prosecutions compared to just 302 the previous year. HMRC’s target in 12/13 had been 565 successful prosecutions. “In the space of just one year, HMRC has massively ramped up the numbers of cases it takes to the criminal courts in order to clamp down on tax evasion,” tax law specialist Jason Collins of Pinsent Masons said. He also stated that those being targeted aren’t those that owe large amounts of money but more likely were “people like doctors, dentists, lawyers, construction contractors and restaurant owners who have not declared amounts in the tens of thousands.” Collins also warned that HMRC is set to ramp up its criminal prosecutions for tax evasion over the next few years. Its target number of prosecutions for 2014/15 is 1,165.

Contractors in extractive sector likely to see a boost after Government measures

Recently announced government measures and consultations mean that UK shale gas exploration will accelerate. The measures include a tax package, community benefits and planning to help kick start the shale gas exploration. Obviously we’ve also seen a lot of issues with the shale exploration with the Balcombe protests over the negatives associated with fracking and worries over how it will affect the British countryside.

Service sector booms as UK heads toward recovery

New figures released show that the service sector (which includes freelancers and contractors) had recorded its best month since the beginning of the financial crisis in the beginning of 2006. This news helps to cement the fact that the UK is returning to economic growth. The sector growth is tracked by the PMI and the figure for June was 56.9 but leapt up to 60.2 in July. See the graph below, or for more info click the title link.

 

 

Don’t get caught out by AWR

AWR

The new Agency Workers Regulations (AWR) will come into force later this year and for those keen to be seen as outside the scope of the regulations focus will return to IR35 tests.

In the draft guidance “the definition of an agency worker excludes those who are in business on their own account”, but simply owning a Limited Company and putting your earnings through it will not be enough to put you beyond the scope of the regulations. Any dispute would require the worker to prove that their circumstances, arrangements and company set up genuinely support their self employed status.

A number of factors can be considered in this regard but it is likely that you will need to demonstrate a number of them to succeed in convincing HMRC. Contractors who take fiscal responsibility for any negligence in their advice and purchase appropriate business insurance will be seen as different to those choosing to rely on indemnity from the end client in the same way as an employee would.

Other factors which could be considered are the purchase of your own business equipment, computer hardware and software together with appropriate licences, personal protective clothing for site visits etc. In addition supporting your own professional development through training, or perhaps subscriptions for membership to a professional body in your chosen field.

All of these things are generally provided for employees but if you rely on them it could support the view that your status is only really in place for job flexibility or tax reasons and it would be likely to lead to additional scrutiny from HMRC.