Monthly Archives: August 2012

Freelancers – “Off Payroll Provisions”

The Government has been planning to clampdown on people who work for them but who do so through their own companies. As we know, this follows adverse publicity with several high profile cases of perceived misuse or abuse of the laws, and the Government’s desire to be seen to be putting its house in order.

Final details are still unclear, but it is generally accepted that the onus could be on the freelancers to make a case for their own business.

Freelancers who work in the public sector are increasingly likely to fall under the new ‘off-payroll provisions’ or provide hard proof that they are outside them. It would appear that freelancers working as a limited company will be required to prove to their engaging organisation that they are meeting their income tax and national insurance contributions.

So far, there are a number of ways that this can be reported:-

. voluntarily operate IR35

. treat all the income from their engagement as salary

. use HMRC’s confidential contract review service to establish that IR35 does not apply

. provide some other kind of evidence that IR35 does not apply, i.e; the controversial HMRC business entity tests or seek a contract reviewed by a reputable specialist.

UK demand for IT Contractors

In a recent survey by Elance, it was reported that the demand for IT contractors rose by 14% over the first quarter of this year.

The report indicated that Freelancers who benefited from the increase were those skilled in smartphones and tablet PC development, app developers as well as experts in mobile networks and data.

Elance also reported a 35% increase in Android developers during the first quarter too. Data from the report indicated that larger organisations are engaging with freelancers in situations where previously they would have taken on board permanent employees, which is encouraging news for both freelancers and businesses.

Suneeta Johal, PCG’s (the voice of freelancers) own Research and Information Manager explained “Elance’s findings suggest that businesses have been forced by poor economic conditions to mitigate risk by bringing in freelancers to complete project work and short-term engagements. Hopefully in doing so they will see that the advantages of tapping into a flexible, expert resource in this way are not confined to when times are bad.”

HMRC – Tripled their haul due to late filers

Penalties from HMRC have hit 1.16 million taxpayers who missed the 31 January deadline which is due to bring in £761m compared to the 1.56 million taxpayers who paid late only a year ago, which brought in £250m.

Despite fewer actual instances of late payers the HMRC are set to triple its haul from the taxpayers.

These figures were released after HMRC last week said that it was writing to some 500,000 people to warn them that face individual fines of at least £1,200.

Under the harsher regime, the longer a taxpayer delays submitting their return (having already missed the deadline, for which they automatically face a £100 penalty), the more charges they incur.

Freelancers – Social Media

Social Media is playing a greater role within business, with both freelancers and potential clients using these platforms to look for work. Therfore, it is extremely important that all freelancers/contractors take time out of their work schedule to review their social media presence.

It is important that all your latest skills and achievements are highlighted. A good idea is to google yourself and see if you like the way you look and sound, if you don’t then it is time to make a change and give your online presence a boost!

Remember! Potential clients will also be googling so be sure you feel proud of your online presence.

HMRC – A clear message to tax avoiders

HMRC reported yesterday that during July they won three key court decisions against tax avoidance schemes.

The schemes, if unchallenged would have diverted £200 million from the UK Exchequer.

Jim Harra, HMRC’s Director of General Business Tax said, “These wins in the courts are a victory for the vast majority of taxpayers who do not try to dodge their taxes. They send a clear message to tax avoiders – HMRC will challenge tax avoidance relentlessly and we will beat you.

“We have now had three major court successes in avoidance cases in the last month alone and I hope this sends a very clear message: These schemes don’t come cheap, you carry a serious risk that you’ll end up paying the tax and interest on top of a set-up charge which can run into the hundreds of thousands of pounds. So you have to ask yourself whether it’s really worth it.

“These were complex cases which show HMRC’s experts doing what they do best, delivering great results for the UK.”

David Gauke, Secretary Exchequer to the Treasury said “The Government is committed to tackling aggressive tax avoidance schemes and HMRC will pursue their users through the courts where necessary. These three HMRC wins are very welcome, demonstrating that if an avoidance scheme promises results that seem too good to be true, they probably are.”

HMRC – New Tax Return Penalties

HMRC will soon be sending out letters to around half a million people informing them of the penalties that they have accrued for not filing their 2010/11 tax returns.

The new penalties were introduced in April 2011 as an incentive to file and reduce the costs to the taxpayers for chasing up missing forms. Anyone who chooses to ignore filing their Self Assessment Forms is now liable to pay higher penalties than in previous years.

The new penalties which are now being issued will be for a minimum of £1200 which is broken down as follows:-

. the maximum £900 in daily penalties for non-filing
. a further late-filing penalty of £300 or five per cent of the tax due (whichever is higher).

Stephen Banyard, HMRC’s Director General for Personal Tax said, “We want the returns, not the penalties. This year, half a million more people have filed their return – which means we are issuing 44 per cent fewer penalties.

“But, despite several reminders, nearly six per cent of people have not sent their 2010/11 tax returns to us and they’ll be getting a penalty.

“Where someone has a reasonable excuse for not sending a return on time, we will waive the penalty. We also recognise that there will be some people within this group who don’t need to be in Self Assessment, and we will be happy to remove them from the Self Assessment system and cancel their penalty.”

The penalties are to be issued over the next few weeks and are in addition to the £100 late-filing penalty which was issued to all tax payers who did not send in their return by the 31 January deadline, in late February, early March.

Report shows an increase in Freelancers in the UK

A recent independent report carried out by the Kingston University showed that the number of freelancers in the UK has grown by 12% was endorsed by official Government figures that revealed that more people were opting to become self employed.

The report showed that UK businesses were hiring more independent professionals to carry our specialist project work, with a third of businesses using freelancers on a weekly basis.

The Government’s latest employment figures, published by the Office of National Statisics highlighted a rise in self employment with unemployment falling, which is good news and proof that freelancing has become a vital component in UK’s enconomy.

John Brazier, Managing Director of PCG, who commissioned the report said “The findings from the Kingston Report prove that freelancing is now one of the cornerstones of the UK economy. This data is especially important now as it shows that in tough economic conditions, the ability to be flexible is critical – both for businesses and individuals looking for work.

“Flexible workers such as contractors and freelancers now account for six per cent of the UK’s workforce, making it a significant constituency within the UK workforce deserving of a voice at policymaking and governmental levels.”

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