Chancellor’s ‘shock’ at tax avoidance tactics may impact on contractors
Chancellor George Osborne’s insistence that high-net-worth individuals must pay a minimum level of income tax may result in anti-avoidance measures that impact on higher-earning contractors. The Chancellor told Robert Winnett in The Daily Telegraph that he was “shocked” by typical, and totally legal, tax avoidance measures, such as offsetting the cost of borrowing for buy-to-let properties against tax liabilities. Whilst the Chancellor vowed to tackle avoidance by “people right at the top”, a crackdown on such measures could affect contractors. More…
IT, engineering and construction help drive online jobs growth, with IT hitting highest level since 2008
The IT sector has driven online jobs growth to reach its highest level since November 2008, according to the March Monster Employment Index. “With online job opportunities at their highest level since November 2008, it’s really positive to see that the IT industry is going from strength to strength each month,” says Julian Acquari, Managing Director of Monster UK & Ireland, “The outlook for the UK does remain mixed, but more than two thirds of industries across the UK have exhibited annual growth, which indicates that the job opportunities online are picking up again.” The core contracting sectors of engineering and construction also feature in the Index’s top five growth industries. More…PDF
HMRC risks scoring own goal by failing to listen to its IR35 Forum team-mates
HMRC is at risk of scoring an own goal that will create a lot more costly administration with little or no return on investment, plus unfairly target responsible contractors, if it fails to take on board feedback from its IR35 Forum team-mates. The new business entity tests proposed by the IR35 Forum are potentially an unhelpful layer of complexity on top of an already over-complex system – hardly the ‘better administration of IR35’ that the Forum was set up to introduce. But it doesn’t have to be like that. By listening to its IR35 Forum team-mates now, HMRC has a great opportunity to look again at its scoring tactics and game plan, and to avoid scoring a game-losing own goal. More…
Contractors ARE being affected by new Agency Workers Regulations
Contractors are encountering new and potentially troublesome labour market dynamics induced by the Agency Workers Regulations, as contractor agency billings fall and ‘temp to perm’ conversions bolster permanent employment growth. March’s Recruitment and Employment Confederation (REC)/KPMG Report on Jobs also shows that demand growth for contract and temp workers was at its weakest in two-and-half-years. “Some of the rise in permanent placements appears to stem from employers simply switching temporary workers to permanent status due to the higher entitlements that the Agency Worker Regulations have given them,” explains KPMG partner Ronnie McCombe.
Two thirds of clients use exclusions to mitigate Agency Workers Regulations cost increases
Two thirds of clients are using exclusions, such as the Swedish Derogation and engaging excluded categories of workers such as contractors, to mitigate the increased costs of the Agency Workers Regulations (AWR). A survey by law firm Eversheds also suggests that short-term engagements lasting less than the 12-week qualifying period for matched pay are a common mitigation strategy. “Nearly two thirds of respondents [to the survey] claim to rely on at least one or more such exclusions,” explains Eversheds Associate Richard Sheldon. “Short term assignments…or [the] engagement of excluded categories of worker, such as the genuinely self-employed, are clearly legitimate circumstances to which [AWR] may not apply.”
City of London contract market “active and stable”, despite uncertainty
IT and other contractors dependant on London’s financial sector “are genuinely working in a confused and uncertain market”. That’s according to the March Morgan McKinley London Employment Monitor, which also shows City job vacancies falling by 4% compared to the previous month. IT contractors in particular depend heavily on the financial sector as a source of ongoing and well paid contracts. “The permanent jobs market has remained very challenged,” says Andrew Evans, Chief Operations Officer, Morgan McKinley Financial Services. “Activity in the temporary market has been significantly more active and more stable although there is no actual growth.” More…
Improve customer experience and tackle avoidance, is Chancellor’s message to HMRC
In a letter to incoming HMRC Chief Executive Lin Homer outlining his expectations in the 2012-2013 financial year, Chancellor George Osborne has confirmed his intention to close the ‘tax gap’, tackle avoidance and implement cost savings. The letter also identifies anticipated improvements in customer service for taxpayers, which may benefit contractors, although the proposed revamp of IR35’s administration would appear to be at odds with that strategy. “I have set a clear ambition to make the tax system more transparent and easier to understand,” writes Osborne. “It is therefore important that HMRC take further steps in 12-13 to make it as straightforward as possible for individuals and businesses to comply with the tax system and improve customer experience.”
Pay As You Earn (PAYE) Real Time Information (RTI) pilot begins
Contractors, particularly those trading via umbrella companies, are a step closer to submitting their payroll data online in real time, as HMRC’s Real Time Information (RTI) pilot begins this month with ten volunteer employers. HMRC’s objective is that all employers and pension schemes will have to submit payroll data online in real-time from October 2013. All umbrella company contractors will be affected, and RTI may reduce the need for complex adjustments and temporary tax codes when contractors move between assignments and umbrellas. Limited company contractors should check with their accountant to determine how RTI may affect them.
Contractor prospects in construction and services buoyed by strong sector performance
Contractor prospects in the construction and services sectors look set to improve as both sectors performed strongly in March. The Markit/Chartered Institute of Purchasing and Supply (CIPS) UK Services and Construction Purchasing Managers’ Index (PMI) both showed increased levels of output, hiring and confidence. In services “new product releases, plans for investment and expectations of increased marketing should all support activity growth in the coming 12 months”, which in turn should release new contracts as firms take on new workers to increase capacity. More…
Sharp fall in central government IT staff numbers since 2008
IT staff numbers have fallen sharply across central government since 2008, reveals a Freedom of Information (FOI) request by Guardian Government Computing. According to Sade Laja on guardianprofessional, the “number of IT professionals working at major government departments has fallen by about 9%” since 2008. Some departments have lost up to 44% of their IT staff during the period. Despite the cuts, British Computer Society (BCS) director of professionalism Adam Thilthorpe told Guardian Government Computing: “...because of the government's policy, such as digital by default, there is going to be a growing need for IT skills.” More…