As the dust settles after the Summer Budget announcement and contractors, freelancers and other independent professionals are dealing with the realisation that the government may yet introduce more measures which will have a significant impact on their finances, news from elsewhere is mixed.
Self employment is on the decline
Whilst there have been many reports about the increasing numbers of self employed individuals in recent months, it appears that the ongoing increase in self employment may be drawing to an end. With 131,000 fewer independent professionals than there were in the previous year, speculation is rife as to the reasons that fewer people are choosing to go it alone. The Association of Independent Professionals and the Self Employed are concerned, believing that the Conservative government’s lack of support could be responsible, but there are those who believe that it is a sign of a new-found strength in traditional employment.
With the Chancellor announcing his second Budget of 2015, there has been plenty to keep contractors interested in the government’s plans for their future. Between HMRC’s attempts to raise revenue and the Conservative Party’s pledge to support small businesses, it has been a busy month.
HMRC admits shortcomings
Calling HMRC may not be top of most people’s lists of things to do at the best of times, but the department have had to admit that they have failed to provide a suitably efficient service over recent months. The chief executive has acknowledged the difficulties that people have been having, and pledged an increase in the number of staff available in the run-up to the July 31st tax credit deadline.
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With contractor availability hitting a seven-month low, recruiters have been having trouble finding qualified staff to fill the roles available, but this means contractors’ prospects are good in a number of sectors, such as IT.
Firms relying on IT security contractors
An increasing number of companies are failing to protect themselves against online fraud and attacks on the sensitive data that they hold, meaning that they have to turn to IT security contractors to help them deal with data breaches with increasing regularity. The last two years have seen more breaches than ever before with a 183 per cent increase in the number of security investigations launched.
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With the country settling in to a post-election routine, there are some issues which keep coming up time and time again, such as the buoyant market for contractors and the ongoing campaign against tax avoidance. There are a number of different organisations speaking out about the major issues.
BBC tips off HMRC about tax avoidance
The Employment Allowance is the latest government scheme to come under threat from aggressive tax avoiders who are trying to take advantage of the opportunities which are designed to help those who need support to make a success of their businesses. One of the recruitment industry’s most prominent companies has been encouraging their clients to set up small limited companies in order to take advantage of the allowance and save up to £2,000 per year in National Insurance payments. A secret recording caught an adviser recommending the scheme and the BBC has passed details to HM Revenue and Customs who have reminded those who might be tempted that this behaviour could incur a £1 million fine.
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The election results threw up a lot of questions about almost everything, from continued membership of the EU to the details of planned changes to the tax system. However, in the early days when many of the decisions were still to be made, life continued apace and contractors were offered some advice by those involved in hiring them.
It’s all about the money when it comes to IT contracting
Although most contractors are keen to foster long-term relationships with their clients, focussing on the job in hand is the best way to land a contract, according to those who are responsible for hiring short-term employees. This week saw the release of a study which showed that businesses want immediate focus on how to make savings surrounding the specific problem they need fixing before they will even consider long-term planning or strategizing, so contractors who want to discuss bigger picture may be missing out. […]
As the countdown to the general election saw all the parties setting out their stalls when it came to post-election promises and ideas designed to appeal to voters. Some did a good job of appealing to independent professionals whereas others’ offerings were lacklustre to say the least, but self employment was given a reasonable amount of attention.
Contracting experts involved in election speculation
Simon McVicker, the director of policy and external affairs at the Association of Independent Professionals and the Self Employed had as much trouble predicting the outcome of the election as anyone else. His concern was that any government would need to work closely with experts such as those at IPSE to make provision for the independent workforce and avoid falling into the trap of resting on its laurels as far as helping small businesses to succeed in today’s economic climate. […]
As the general election dominates the news, the parties are competing for votes with ever more promises and pledges. In a month that has seen the release of all the parties’ manifestos as well as updates on some of the most pressing issues of the day, there has been plenty for contractors to keep track of.
Continuing IR35 controversy
Despite pledges to simplify and clarify the legislation which has had contractors constantly confused since it was introduced, HM Revenue and Customs has failed to impress with their attempts to make things clearer for those who are attempting to navigate the updated rules. Although HMRC promised to speed up the average length of an IR35 enquiry, there have been complaints that the department are refusing to accept evidence from contractors about their employment status.
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HMRC thinking the worst of taxpayers
The process of completing one’s annual self assessment tax return is rarely one that people relish, but knowing that any slight mistake will be assumed to be deliberate can make it even more daunting. The latest figures suggest that the department is issuing more fines for deliberate non-compliance than ever before, with the number of penalties nearly trebling between 2012-13 and 2013-14. The tax man insists that they evaluate each case on its merits, but the only way to avoid a fine is to ensure that your tax return is completed correctly.
The budget is out, the main parties are preparing for the election, yet still the world of finance and employment keeps turning with a raft of changes, updates and some unpopular decisions to be made about a range of subjects. These have included:
Contractors bringing IR35 cases to tribunal
IR35 has plenty of critics, but the news that some of the freelancers who are currently disputing their status will be taking their cases to tribunal is encouraging to those who want some clarity on the major issues. Taking this kind of case to tribunal means that the details will be made public and many bodies that represent freelancers are hoping that the rulings will clear up much of the confusion surrounding the application of the legislation.
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Offshore tax evasion measures under fire
The Chartered Institute of Taxation has criticised the government’s latest plans to cut down on offshore tax evasion. The measures include a ‘strict liability’ clause which is designed to ensure that those using dubious means to reduce their tax bills can be penalised to the full extent of the law. The CIOT is unenthusiastic, however, because the proposals mean that someone could be handed a prison sentence without there being any requirement to prove intent on the part of the culprit. The CIOT are working with HMRC to help improve the terms of the legislation to help them focus on intentional evasion.
Understand the details
The news for contractors has been mostly positive over the second half of March, although for many the Budget threw up as many questions as it answered. A number of specific issues have been addressed by parliament in the run-up to the election though so there are some signs that self employment is becoming more […]
In a month where every UK tax payer was anticipating the news from the Chancellor’s budget, much of the speculation focussed on the potential for independent professionals to benefit from the news. There were some other stories which grabbed the headlines in the run-up to the announcement.
HMRC attempted to combat misunderstandings about the tax system in an attempt to reduce the number of people who were managing to file their tax returns on time, but making avoidable errors in doing so. Many people are aware of the potential to be fined for failing to complete your tax return, but the penalties for completing on time but incorrectly are less publicised.
This year, HMRC have contacted those who failed to fill out their details correctly and provided them with guidance on the system in order to help them ascertain where they went wrong, work out if they have ground for appeal, and talk them through the process if they need to do so. […]