ContractorCalculator: Contracting news in brief 27/April/2012

HMRC’s new business entity test questions and process revealed

Limited contractors seeking to determine their level of IR35 risk, and the likelihood of an investigation, will soon be able to take HMRC’s new online business entity test. The test, believed to be going live from May 2012, does not replace the original IR35 legislation and case law but is designed as a tool for HMRC to screen contractors and identify those at high risk of being inside of IR35. It is based on 12 online questions – published by – that contractors can answer about their contracting business. The scoring has been hotly contested with non-HMRC members of the IR35 Forum, because, as it stands, a significant number of genuine contractors will fall into the medium and high risk banks, which may subject them to unnecessary investigation by HMRC. More…

The UK, but not contracting, falls back into a technical recession

Preliminary estimates of the UK’s performance in the first quarter of 2012 have put the economy back into a ‘technical’ recession, but most core contracting disciplines remain resilient and other economic indicators are more positive. According to the Office for National Statistics (ONS), economic output shrank in the fourth quarter of 2011 and the first quarter of 2012. Two successive quarters of contraction signify a recession. However, the official data is at odds with other economic and labour market surveys, which show increasing demand for contractors across IT, engineering, construction, management and marketing and other sectors. More…

Umbrella contractors consistently earn double average salaries

Umbrella company contractors earn an average salary of £57,087 compared to the Office of National Statistics’ average national salary of £25, 568. A new report by umbrella solutions provider Parasol also shows that this pattern is consistent across all UK regions, apart from the East Midlands and Northern Ireland. This is despite average umbrella contractor earnings falling from £33.12 in 2011 to £32.39 in 2012. Umbrella contractors in Greater London and the South East earn the most: £65,811 and £62,992 respectively. More…

Hirer confidence at record high, but AWR once again has an impact on demand

The confidence of hirers grew throughout the first quarter of 2012 to reach its highest level since the Recruitment and Employment Confederation’s JobsOutlook survey began in March 2009. Clients and employers intend to hire more staff in both the short and long term, with a third planning to take on more contractors and temps in the next quarter. However, the report highlights that “nearly half of [hirers] have made changes following [the Agency Workers Regulations]”, perhaps partly accounting for the slower growth in contractor demand than in the previous month.

Contractors set to enjoy renewed assignment growth in the manufacturing sector

Contractors working in the manufacturing sector look set to enjoy a renaissance in demand for their services. According to the Confederation of British Industry (CBI) Quarterly Industrial Trends Survey April 2012, “the UK manufacturing sector is showing signs of bouncing back from the fragile conditions seen at the end of 2011 and start of 2012, and sentiment has improved for the first time in a year.” Clients in the sector plan to spend more on innovation and plant and machinery, which will have a positive knock-on effect for contractors elsewhere in the supply chain. More…

Consumer-led contract markets buoyed by nine-month high in confidence

Consumer and retail business led contracting markets should benefit from a nine-month high in consumer confidence reported by the latest Nationwide Consumer Confidence Index. The index also reports that “sentiment towards spending on household goods rose and a slightly lower proportion [of respondents] expressed reservations about major purchases”. Although well below the long run average, if this increased consumer confidence results in higher spending, it could improve the prospects of contractors across a number of disciplines and sectors. More…

Jump in confidence improves prospects for marketing and management interims

A jump in client confidence and marketing budget growth reported in the Institute of Practitioners in Advertising (IPA) Bellwether Report – 2012 Q1 should improve prospects for marketing and management interims. Confidence in the client-side marketing sector is at its highest for two years and budgets have been revised up slightly. “It’s encouraging to see that marketing budgets are up again for the third quarter running, leading to the first rise in annual spend in four years,” says IPA President Nicola Mendelsohn.

Tax body calls for restrictions on retrospective tax legislation that could affect contractors

The Chartered Institute of Taxation (CIOT) has made a strong case to the House of Commons Treasury Committee of MPs to restrict the use of retrospective tax legislation “to wholly exceptional circumstances, which should be narrow and clearly-defined”. The CIOT fears retrospective tax legislation could “to do damage to the image and reputation of the UK tax system” and that “it could lead to lazy drafting of legislation”. The CIOT’s work should offer some comfort to contractors concerned that their past participation in avoidance schemes may come back to bite them in the form of retrospective tax legislation.

Rogue recruiter fined and banned for withholding pay

The Employment Agency Standards (EAS) inspectorate fined recruiter Zoe Evans and banned her from being a director for a year after she was prosecuted for withholding pay from temps working through her agency. The EAS is the agency of the Department for Business, Innovation and Skills (BIS) responsible for policing the agency sector, and is where contractors should turn if they are concerned about the professional conduct of their recruiters.

Published: Thursday, April 26, 2012

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