ContractorCalculator: Contracting news in brief – 11/May/2012

HMRC launches its updated IR35 processes, confirming investigations are set to rise

HMRC finally launched its much anticipated updated processes. In part the fruits of a year’s work by the IR35 Forum, the system now includes: an HMRC helpline for contractors, business entity tests, IR35 example scenarios and guidance on what it all means. What has not changed is the underlying IR35 legislation, which sources suggest is now to be implemented by a 36-strong HMRC team that has been assembled to ramp up enforcement. An HMRC spokesperson confirmed to AccountingWeb that it expects the number of investigations to increase imminently. More…

IR35 Forum members less than impressed with HMRC’s handling of ‘simplification’

Contracting, recruitment and small business organisations say “the new IR35 Guidance ... fails to take into account key elements of their advice.” The Freelancers and Contractor Services Association (FCSA), PCG, the Recruitment and Employment Confederation (REC), the Association of Professional Staffing Companies (APSCo) and the Federation of Small Businesses (FSB) have issued a joint statement expressing their dissatisfaction with how HMRC has handled the creation of its new regime and, in particular, the business entity tests.

Demand sustained for core contracting disciplines as the contract market falters

Contractor demand in the core contracting disciplines of IT, engineering and construction has been sustained during April. This is despite a fall in overall agency billings and the slowest growth in contractor and temp vacancies since September 2009, reported in April’s KPMG/Recruitment and Employment Confederation (REC) Report on Jobs. The Monster Employment Index showed month-on-month online demand for workers was down in IT and engineering in April; 12.5% and 4.7% respectively when compared to March. Taking the longer-term view, Monster’s figures look more positive: year-on-year online demand in IT has grown by 12% and in engineering by 13%, so it is possible that April’s falls in online demand were a blip. More…

Oil and gas contractor prospects upbeat following positive sector survey results

Oil and gas contractor prospects received a boost following the news of a positive outlook by firms operating in the North Sea, with increased activity and contractor hiring forecast. The latest Aberdeen & Grampian Chamber of Commerce Oil and Gas Survey confirms there are lingering perceptions by global energy companies that the UK oil and gas sector has an unstable fiscal regime because of the Chancellor’s ‘tax grab’ in 2011. This has not halted high levels of investment that will result in greater numbers of contracts.

Oil and gas supply chain confidence at all time high, but skills shortages loom

There is further good news for oil and gas contractors, as the latest Oil & Gas UK Q1 2012 business confidence index has reached an all-time high. The confidence in the sector is led by oilfield services companies reporting “high levels of activity and better than average business revenue”, according to Oil & Gas UK Supply Chain Director David Ripley. The surge in new business “could be explained by their involvement in a number of major UK projects as well as growth in the export of their services and goods to clients around the world,” he adds. However, services firms have expressed concerns about skills shortages, which could drive up contractor rates. More…(PDF)

Contractors’ livelihoods at risk because of AWR claims recruitment body

“Jobs are being lost and people’s lives directly affected because of the Agency Workers Regulations,” claims Association of Recruitment Consultancies (ARC) chairman Adrian Marlowe. He cites the results of recent KPMG/Recruitment and Employment Confederation (REC) Report on Jobs (ROJ) as evidence that hirers are taking on fewer contractors and temps. The ROJ has repeatedly blamed the slump in contract and temp billings on AWR. More…

Contractors hold the key to unlocking growth in UK businesses

Contractors can fill the skills gaps and circumvent organisational processes cited by UK managers as being the primary barriers to growth in their organisation. A survey of 1,000 UK managers by the Institute of Leadership and Management shows that 25% believe that skills shortages are holding back their organisation, closely followed by 24% identifying organisational processes as the barrier to growth. Contractors can deliver skills on demand and, because of their independent status, are able to work around organisational barriers that employees can’t.

Contractors should look to small to medium sized manufacturing firms for contracts

Small to medium sized entity (SME) manufacturers may turn out to be a good source of contracts, according to a recent survey by the Confederation of British Industry (CBI). The CBI’s latest quarterly SME Trends Survey reveals a sector expecting to grow solidly in the next quarter, with headcounts and investment forecast to increase. Because the sector is still dogged by uncertainty over the UK economy and eurozone, contractors are likely to present an attractive option for increasing capacity without increasing risk. More…

Manufacturing contractors have grounds for cautious optimism as growth returns

Contractors working in the broader UK manufacturing sector have grounds for cautious optimism, as output returned to growth territory after decreases in two previous successive quarters. Growth of 0.3% between February and March 2012 was led by the pharmaceutical and electronics industries, suggesting these are growing sectors for contractors to target. Less promising sectors appear to be food, beverages and tobacco. More…(PDF)

Contractors receiving payment protection insurance (PPI) compensation may be facing a tax bill

Contractors who have received, or are expecting to receive, payment protection insurance compensation (PPI) may be facing a tax charge on some of their cash. HMRC has published advice which says that, although no tax is due on the compensation element of PPI payments, any additional interest is taxable. Contractors should check with the PPI compensation issuer to confirm whether tax has already been deducted at source, which HMRC says will happen in most cases. Contractors should also alert their accountant or umbrella company so any interest can be included on their tax return.

Published: Friday, May 11, 2012

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