Labour MP Andrew Miller on Monday urged IT/telecoms and engineering/technical recruiters to “keep your nerve” in the face of a deepening global financial crisis.
Speaking to Association of Technology Staffing Companies (ATSCo) members at a House of Commons reception, Miller said, “There is a determination across the parties to make sure Britain comes out as strongly as possible” from the the economic turmoil. “It has been an extraordinary period,” Miller said of the last three weeks, which have seen investment banks fail and dramatic ups and downs for share prices.
Miller also reiterated his commitment to ensuring that any upcoming directive and legislative on equal treatment for agency workers does not have a negative impact on professional contractors who work through agencies or umbrella companies but instead penalises employers and others who exploit ‘vulnerable workers’. “I’m absolutely convinced it would be wrong to use the legislation to battle these organisations,” he said of the high-end professional services providers. “You have my assurance that is not what is intended.”
* - Article from www.recruiter.co.uk
Not what is intended and what happens can sometimes differ wildly. I hope, seriously hope, that Mr Andrew Miller and the rest of the labour government ensure that professional contractors are not penalised. Due to the HMRC they are already penalised enough.
Showing posts with label HMRC. Show all posts
Showing posts with label HMRC. Show all posts
Tuesday, October 7, 2008
Friday, September 5, 2008
IT contractor liable for £99,000 tax after losing IR35 case
The High Court has ruled against an IT consultant who was fighting a £99,000 tax demand for work he completed on behalf of motoring organisation the AA.
The Professional Contractors Group (PCG), which represents UK IT freelancers, has expressed its shock at the judgement, which it said could have major implications for other consultants.
The "Dragonfly" IR35 case involved PCG member Jon Bessell, the owner of Dragonfly Consultancy. He is now liable for £99,000 in tax. Speaking after the judgment was delivered, he said, "I am devastated by today's news. Not only does it affect my family and me, but all the other freelance professional consultants who are trying to earn an honest living. "I was never an employee of the AA and I simply cannot understand how the High Court has reached its decision. It is a travesty of justice."
The judgement found that Bessell was technically an employee of the AA when completing IT projects for the organisation, and that he was therefore liable for the £99,000 tax demand.
The Professional Contractors Group supported Bessell in bringing his appeal because of the potential wider implications of the case.
PCG managing director John Brazier said, "This is a potentially massive blow to freelancers throughout the country. This case threatens the long-established defences against IR35.
"We will be looking at the judgment in very close detail to work out its full implications."
The Professional Contractors Group will be publishing further guidance on the consequences of the judgment shortly, he said.
* - Article from Computer Weekly.
It is worrying that despite the Government always saying that they support small businesses and the freelancer market they permanently seem to be trying to clamp down on this section of our workforce. Back in 2002 one in ten of the working population was self-employed. I would imagine that this number has only increased in the last few years. Surely this number of people should be supported more. Yes everyone should pay tax (it's not like in the UK we aren't taxed enough) but what is the point of trying to better yourself, earn more, improve your and your family's living standards, add to the economy if all your hard earned money is going to be whittled away. The whole process should be simplified. It is all the Government rules and regulations that mean thousands are spent on Accountancy fees which still don't guarantee you safety from the long arm of the HMRC. Simplify it, make it easier to understand, promote entrepreneurial and innovative thinking, promote small businesses, promote freelancers, because without them this economy would struggle and companies will find skills that they want are now based abroad. It isn't really surprising that many people are looking abroad to try and find that better standard of living!!! I mean, this Government will take 40% of your hard earned money which you have paid tax on all your life and which you want to leave to your loved ones after you have died. Fair - I think not.
The Professional Contractors Group (PCG), which represents UK IT freelancers, has expressed its shock at the judgement, which it said could have major implications for other consultants.
The "Dragonfly" IR35 case involved PCG member Jon Bessell, the owner of Dragonfly Consultancy. He is now liable for £99,000 in tax. Speaking after the judgment was delivered, he said, "I am devastated by today's news. Not only does it affect my family and me, but all the other freelance professional consultants who are trying to earn an honest living. "I was never an employee of the AA and I simply cannot understand how the High Court has reached its decision. It is a travesty of justice."
The judgement found that Bessell was technically an employee of the AA when completing IT projects for the organisation, and that he was therefore liable for the £99,000 tax demand.
The Professional Contractors Group supported Bessell in bringing his appeal because of the potential wider implications of the case.
PCG managing director John Brazier said, "This is a potentially massive blow to freelancers throughout the country. This case threatens the long-established defences against IR35.
"We will be looking at the judgment in very close detail to work out its full implications."
The Professional Contractors Group will be publishing further guidance on the consequences of the judgment shortly, he said.
* - Article from Computer Weekly.
It is worrying that despite the Government always saying that they support small businesses and the freelancer market they permanently seem to be trying to clamp down on this section of our workforce. Back in 2002 one in ten of the working population was self-employed. I would imagine that this number has only increased in the last few years. Surely this number of people should be supported more. Yes everyone should pay tax (it's not like in the UK we aren't taxed enough) but what is the point of trying to better yourself, earn more, improve your and your family's living standards, add to the economy if all your hard earned money is going to be whittled away. The whole process should be simplified. It is all the Government rules and regulations that mean thousands are spent on Accountancy fees which still don't guarantee you safety from the long arm of the HMRC. Simplify it, make it easier to understand, promote entrepreneurial and innovative thinking, promote small businesses, promote freelancers, because without them this economy would struggle and companies will find skills that they want are now based abroad. It isn't really surprising that many people are looking abroad to try and find that better standard of living!!! I mean, this Government will take 40% of your hard earned money which you have paid tax on all your life and which you want to leave to your loved ones after you have died. Fair - I think not.
Friday, July 25, 2008
Temp benefits
The Treasury and HM Revenue and Customs has released a consultation document on the use of travel dispensations for temporary workers.
Travel dispensations allow temps to claim tax relief for expenses incurred when travelling to and from temporary assignments.
Commenting on the paper, Anne Fairweather, head of public policy at the Recruitment and Employment Confederation, said: “We need to consider this consultation carefully. However, there is certainly a place for mobile workers to claim expenses they incur through their flexible employment.”
* - Article from Recruiter.
Travel dispensations allow temps to claim tax relief for expenses incurred when travelling to and from temporary assignments.
Commenting on the paper, Anne Fairweather, head of public policy at the Recruitment and Employment Confederation, said: “We need to consider this consultation carefully. However, there is certainly a place for mobile workers to claim expenses they incur through their flexible employment.”
* - Article from Recruiter.
Friday, July 11, 2008
Selling Public Services
A government document has been leaked to me which may come to be seen as the last gasp of Blairite New Labour.
It has the unappetising title of "Understanding the Public Services Industry: How big, how good, where next?" and it was commissioned by John Hutton, the Secretary of State for Business - who once-upon-a-time was a Blairite ultra and is now, apparently, an enthusiastic Brownite.
The paper, written by Deanne Julius - the head of Chatham House and a former member of the Monetary Policy Committee - claims that this administration's controversial outsourcing and contracting-out of public services has created a world-leading industry for the UK with great export opportunities.
Julius is brainy. So her argument shouldn't be dismissed lightly. But trade unions on the left and Tories on the right are both likely to argue that her paper is consultant-backed spin, or a clever public-relations campaign deficient in real economic meat.
So what exactly is "public services industry"? Well, it's those private and "third sector" enterprises that provide services to the government or to the public on behalf of government. So it includes hospital cleaners, and suppliers of IT to Her Majesty's Revenue and Customs, and trainers of military pilots and managers of private-sector prisons, inter alia.
It's true they all have one big thing in common, which is that they are in receipt of public money. Which means that if they have a shared, valuable, highly developed skill it is in persuading ministers, or local councillors or civil servants to hand them our precious tax wonga.
But arguably what differentiates the hospital cleaner from the software engineer working in HMRC is more significant than the fact that they are both in receipt of public money. Call me unimaginative, but a provider of IT services seems to me to be an IT company, not a "public service" company, even if those IT services are bought by the NHS.
So the attempt by both Julius and Hutton to claim that the public services industry represents a huge homogenous industry seems a trifle ambitious. Others might say it's pretentious and absurd.
But for the record, Julius claims that the contribution to our economy made by the public services industry is £45bn, way greater than food, beverages and tobacco (£23bn), communication (£28bn), electricity, gas and water supply (£32bn) and "hotels and restaurants" (£36bn).
However all that really means is that the government has been handing vast and growing amounts of our tax revenues to private-sector providers of many and varied services.
In fact, the most interesting statistic in the report, perhaps, is that growth in revenues for these recipients of our tax dosh was an impressive 6.8% per year in real terms from 1995/6 to 2003/4. Interestingly, as we elided from the Blair era to the Brown months, the rate of growth slowed very significantly - to 2.9% per annum since 2004.
Which perhaps indicates that the current prime minister isn't quite as enthusiastic about outsourcing, contestability and all that as his predecessor.
To give Julius and Hutton their due, there is a plausible patriotic case for cheerleading on behalf of this slightly nebulous industry - which is that other countries seem to be following the UK's lead in handing over increasing amounts of public service provision to commercial firms, such that there may be a substantial export opportunity for British service providers.
Hutton, in fact, seems to be reinventing himself as the Thatcher of our time: she exported privatisation to the rest of the world; he wants to convert the citizens of other countries to the notion that their public services should be provided by our private sector firms.
It's a worthy ambition. And there is a good case to be put that promoting competition for public service contracts and also between public-service providers reduces the cost of those services while sometimes improving the quality of those services (though there are also plenty of examples of the public purse being handsomely ripped off by private sector bunglers and incompetents, especially when it comes to IT).
But to be clear, it's the competition or bidding contest that tends to yield those benefits, rather than the identity of the provider as from the private, voluntary or public sector.
* - Article from www.bbc.co.uk
It has the unappetising title of "Understanding the Public Services Industry: How big, how good, where next?" and it was commissioned by John Hutton, the Secretary of State for Business - who once-upon-a-time was a Blairite ultra and is now, apparently, an enthusiastic Brownite.
The paper, written by Deanne Julius - the head of Chatham House and a former member of the Monetary Policy Committee - claims that this administration's controversial outsourcing and contracting-out of public services has created a world-leading industry for the UK with great export opportunities.
Julius is brainy. So her argument shouldn't be dismissed lightly. But trade unions on the left and Tories on the right are both likely to argue that her paper is consultant-backed spin, or a clever public-relations campaign deficient in real economic meat.
So what exactly is "public services industry"? Well, it's those private and "third sector" enterprises that provide services to the government or to the public on behalf of government. So it includes hospital cleaners, and suppliers of IT to Her Majesty's Revenue and Customs, and trainers of military pilots and managers of private-sector prisons, inter alia.
It's true they all have one big thing in common, which is that they are in receipt of public money. Which means that if they have a shared, valuable, highly developed skill it is in persuading ministers, or local councillors or civil servants to hand them our precious tax wonga.
But arguably what differentiates the hospital cleaner from the software engineer working in HMRC is more significant than the fact that they are both in receipt of public money. Call me unimaginative, but a provider of IT services seems to me to be an IT company, not a "public service" company, even if those IT services are bought by the NHS.
So the attempt by both Julius and Hutton to claim that the public services industry represents a huge homogenous industry seems a trifle ambitious. Others might say it's pretentious and absurd.
But for the record, Julius claims that the contribution to our economy made by the public services industry is £45bn, way greater than food, beverages and tobacco (£23bn), communication (£28bn), electricity, gas and water supply (£32bn) and "hotels and restaurants" (£36bn).
However all that really means is that the government has been handing vast and growing amounts of our tax revenues to private-sector providers of many and varied services.
In fact, the most interesting statistic in the report, perhaps, is that growth in revenues for these recipients of our tax dosh was an impressive 6.8% per year in real terms from 1995/6 to 2003/4. Interestingly, as we elided from the Blair era to the Brown months, the rate of growth slowed very significantly - to 2.9% per annum since 2004.
Which perhaps indicates that the current prime minister isn't quite as enthusiastic about outsourcing, contestability and all that as his predecessor.
To give Julius and Hutton their due, there is a plausible patriotic case for cheerleading on behalf of this slightly nebulous industry - which is that other countries seem to be following the UK's lead in handing over increasing amounts of public service provision to commercial firms, such that there may be a substantial export opportunity for British service providers.
Hutton, in fact, seems to be reinventing himself as the Thatcher of our time: she exported privatisation to the rest of the world; he wants to convert the citizens of other countries to the notion that their public services should be provided by our private sector firms.
It's a worthy ambition. And there is a good case to be put that promoting competition for public service contracts and also between public-service providers reduces the cost of those services while sometimes improving the quality of those services (though there are also plenty of examples of the public purse being handsomely ripped off by private sector bunglers and incompetents, especially when it comes to IT).
But to be clear, it's the competition or bidding contest that tends to yield those benefits, rather than the identity of the provider as from the private, voluntary or public sector.
* - Article from www.bbc.co.uk
Friday, May 2, 2008
Managed Service Companies (MSC) - New Regulations
From 6th April 2007 the Government introduced new tax rules relating to Managed Service Companies (MSC). Full guidance on the legislation is published by HMRC, details of which are given under Q13. This section of the REC Guide is a brief explanation for REC Members based on that guidance.
The justification for this legislation is the Government’s view that workers who work through MSC are invariably not in business on their own account, in other words they are not self employed for tax purposes. However, they are paid in a way which minimises the amount of PAYE tax and National Insurance Contributions (NIC) they are liable for. They do this by paying the workers a salary at the national minimum wage (NMW) and the balance by way of dividends.
IR35 legislation introduced in 1999 was supposed to ensure that those who worked through a limited company, of any description, and who were not genuinely self employed would be liable for paying PAYE and NIC on all income earned from providing their personal services. However the IR35 legislation has not been fully effective as a means of recovering tax shortfalls because it relies on an interpretation of the complex tests for self employment. Therefore, the Government enacted the MSC legislation in a bid to collect the £350 million of tax it believes is slipping through the net under the name of bogus “self employment”.
The new legislation requires a MSC to deduct PAYE tax and NIC on all earnings paid to workers and to apply the same rules for tax relief on travel expenses as apply to other employees. The new legislation goes further than IR35 in that it makes it compulsory to deduct PAYE tax and NIC if a company falls within the definition of a MSC. Further, if a MSC fails to deduct any or the full amount of PAYE tax and NIC, HMRC have powers to recover this shortfall from third parties, which can include employment businesses (from 6th January 2008). See Q4 & Q5 below. * Article from the REC website.
For the above reasons G & G Recruitment do not favour or recommend any MSC. Simply we can provide weblinks and contact details should contractors ask us for this information. If you have any more questions on this, please do contact us.
The justification for this legislation is the Government’s view that workers who work through MSC are invariably not in business on their own account, in other words they are not self employed for tax purposes. However, they are paid in a way which minimises the amount of PAYE tax and National Insurance Contributions (NIC) they are liable for. They do this by paying the workers a salary at the national minimum wage (NMW) and the balance by way of dividends.
IR35 legislation introduced in 1999 was supposed to ensure that those who worked through a limited company, of any description, and who were not genuinely self employed would be liable for paying PAYE and NIC on all income earned from providing their personal services. However the IR35 legislation has not been fully effective as a means of recovering tax shortfalls because it relies on an interpretation of the complex tests for self employment. Therefore, the Government enacted the MSC legislation in a bid to collect the £350 million of tax it believes is slipping through the net under the name of bogus “self employment”.
The new legislation requires a MSC to deduct PAYE tax and NIC on all earnings paid to workers and to apply the same rules for tax relief on travel expenses as apply to other employees. The new legislation goes further than IR35 in that it makes it compulsory to deduct PAYE tax and NIC if a company falls within the definition of a MSC. Further, if a MSC fails to deduct any or the full amount of PAYE tax and NIC, HMRC have powers to recover this shortfall from third parties, which can include employment businesses (from 6th January 2008). See Q4 & Q5 below. * Article from the REC website.
For the above reasons G & G Recruitment do not favour or recommend any MSC. Simply we can provide weblinks and contact details should contractors ask us for this information. If you have any more questions on this, please do contact us.
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