Crystal Umbrella

Monday 23^rd November sees the very first National Freelancers Day. This has been the brainchild of the Professional Contractors Group in a bid to celebrate the work that is done by contractors and the important contribution that they make to the UK economy. PCG was originally set up to provide a voice for contractors during the implementations of the contentious IR35 tax rule. The group now has 18,500 members across all sectors and continues to speak up and fight for all contractor rights.

Now, in the run up to this important day, PCG has launched the ‘Spirit of Freelancing’ campaign. The aim is to celebrate work as a contractor or freelancer by hearing about the experiences of the people who are out there working in this way. As such, contractors are being asked to contribute by providing their story, anecdote, one-liner or even an artistic piece such as a photograph or drawing which sums up their experiences. It doesn’t matter whether these are injected with humour or deadly serious, as long as they are real. These contributions can be sent to spirit@pcg.org.uk

Managing director of PCG, John Brazier, said: “As National Freelancers Day approaches, we are asking freelancers and client organisations to let us know what freelancing means to them and we would like as many people to get involved to mark the day and capture the spirit of freelancing.”

New figures released by the Office for National Statistic show that unemployment rose by 88,000 to 2.47 million between June and August of this year. As a result the number of people claiming unemployment benefit rose to 1.63 million.

Chief economist at the British Chamber of Commerce (BCC), David Kern, said that while unemployment is still rising it has done so at a slower pace. He commented that this is evidence that the recession is coming to an end.

He said: “There is no room for complacency, and a sustainable recovery is not guaranteed. Although confidence is strengthening, businesses are still facing serious pressures, particularly small and medium sized firms. Lending is still too weak, and many are struggling to retain their skills base.”

Speak to the Recruiter, Luc Fountain from recruitment company Liberty Resourcing, stated: “We are putting out some quite junior positions for reception and administration. If we put out these jobs a year ago, I would not have had any responses but we are now getting around 600 responses for these roles.”

Yvette Cooper, Secretary of State for Work and Pensions concluded: “Although unemployment isn’t as high today as many feared it would be at the time of the budget, it remains a serious problem, which is why we must keep increasing support and advice to get people back into jobs. We will not leave them on their own.”

Do Buckley from AegisTax has spoken to ContractorUK about the recent press interest and exposes surrounding government interest in offshore accounts. Reports have suggested that the government are making every effort to track down accounts which they believe amount to billions in unpaid taxes.

Her colleague Bob Evans stated at a recent conference: “The bottom line is that if you have an offshore account (and almost any account outside your country of residence or nationality could be considered ‘offshore’) you would be well-advised to ensure you understand the relevant laws and directives of the country or countries where you are taxable. If you are complying with all the relevant legislation you need do nothing more. If not, you run the risk of receiving an assessment for unpaid tax plus interest and penalties; you may also face the possibility of criminal prosecution and imprisonment for tax evasion.”

Buckley strives to explain that holding an offshore account is not a criminal activity. However, there are relevant laws pertaining to such accounts and, people have a responsibility to abide by them. Those who don’t, whether on purpose or through being unawares, are set to find themselves under scrutiny.

Evans continued: “Some people will stick their heads in the sand and some will slip the net – for the time being. But the reality is that orders forcing banks to provide information, international cooperation and the increasing ease with which tax authorities can search and compare data will make it more and more difficult to hide undeclared assets.”

The authorities who are now making enquiries, including information sharing between governments and other countries, have the power to make these retrospective enquiries. Many countries have, in the past, been seen as tax havens but this is unlikely to last for much longer.

HMRC have introduced the New Disclosure Opportunity as a partial tax amnesty regarding offshore accounts and related unpaid taxes between September 2009 and March 12^th 2010.

Specialist accountancy firm SJD Accountancy has joined forces with specialist IT recruiter Technojobs to create a rate checker for contractors. This new service will cover the most up to date IT contracting including Java, SQL and C++. The rate checker will be a useful tool for those considering a working as a contractor as well as experienced contractors.

Information available on the web page will include average national and daily rates of pay across all skill sets within the sector.

Managing Director of SJD Accountancy, Simon Dolan, stated: “SJD focuses on giving as much advice and guidance to contractors as possible. We’re specialists and have been helping IT contractors make the transition from permanent work to contracting – we hope our new contract rate checker can make the transition that little bit easier.”

SJD Accountancy is a sector leading company providing accountancy services to freelancers and contractors. They are accredited by the Professional Contractors Group as a Quality Accountant. Meanwhile, Technojobs is an award winning IT recruiter, advertising over 12,000 contracts every month.

Sales and Marketing Manager of TechnoJobs, Anthony Sherick, commented on the new partnership service: “The page has huge value for those entering the contractor market as well as experienced IT contractors’. This project seeks a natural fit between the two companies. We have a number of other projects on the go and have plans for future partnerships that will further benefit both contractors and recruiters alike”.

Many American and European companies have moved their bases to India in recent years in a bid to reduce costs. However, proposed changes to the taxation system in India could force them out.

Currently India has a rather complicated tax system. The Indian government has now tabled sweeping reforms which could seriously impact on any businesses working from their country. Part of the new reforms would consider all companies with a “management presence” in the country as being Indian tax residents. This would, therefore make such companies liable to taxation at a rate of 25%. Such reforms could result in a move away from outsourcing IT services to the sub-continent which has been such a prevalent trend for many years now. Most larger companies have an IT presence in India, many of whom choose to have software developed there as it is considerably cheaper than in the UK.

Commenting on this news, Pranay Satra from Ernst & Young stated: “The Indian Government’s proposals are immensely ambiguous. They could have a serious dampening effect on foreign investment.” Pranay also commented that such reforms are likely to ‘spook’ foreign companies.

Recently, many UK-based companies have come under fire for taking advantage of the ‘intra-company transfer’ system by displacing British workers in favour of cheaper workers brought in from India.

It would appear that India is now looking to benefit from their position in this industry.

Satya concluded: “As India has become more globally integrated, tax officials have taken radical new steps regarding global transactions – even those with only an indirect effect on India.”

On Monday, Shadow Chancellor George Osborne announced plans to waive employers’ national insurance contributions for any businesses starting up within the first two years of the Conservatives taking office, if they win. This concession will apply only to the first ten members of staff taken on by each of these new companies.

With regards to how this may effect contractors, tax experts have commented that this move is unlikely to be of benefit. As it stands employers’ NI contributions are levied at 12.8% of the employee’s salary. While a contractor working through a limited company must pay these contributions on his own salary and anyone else he employs, questions have been raised as to whether or not said contractor could wind up this limited company and set up a new one.

However, experts have been quick to denounce this idea. Speaking to Contractor UK, Tony Harris from Contractor Money, said: “In reality this will only benefit those contractors who are currently inside of IR35. IN almost all cases, anyone outside of IR35 would be likely to draw a low NI-able salary in the first place so this news will be largely irrelevant for them.”

He continued: “It’s also my understanding that Osborne made no mention of scrapping the planned increased in employers’ NI contributions (which are set to rise by 0.5% from 2011) so current contractors will have little to cheer about from this announcement.”

Meanwhile, PCG policy adviser, George Anastasi stated to Contractor UK: “Our understanding is that this is a measure designed to increase employment and incentivise businesses to take on new staff. Therefore we are not sure this is intended to be of benefit to freelancers, or that it will apply to new freelancers. Naturally, we are seeking further clarification on this, but we don’t at present believe it will apply to our members.”

All eyes are on Britain’s major political parties as we count down to next year’s General Election. Top of the agenda for contractors is where their issues will feature on manifestos. The Conservative Party have stated that, should they win, they would delay the implementation of the Agency Workers’ Directive until December 2011.

Anne Fairweather, head of public policy at the Recruitment and Employment Confederation (REC) spoke to The Recruiter at the recent Conservative Party conference in Manchester. She said that Jonathan Djangoly, shadow minister for corporate governance and business regulation had stated that the implementation of this directive would amount to £40 billion for British businesses over the next ten years. This has been the main reason given for delaying implementation.

Chief Executive of REC, Kevin Green, commented: “The REC has been calling on the government to delay implementing this directive until the last possible moment in 2011. We are pleased to see the Conservative Party recognises that the cost of getting the implementation of this directive wrong could be huge. It is vital that the labour market recovers before the regulations are implemented. This will also give recruiters and their clients the time to plan how best to ensure that equal treatment after 12 weeks works in practice. This is a complex issue and by waiting until December 2011, we can ensure that we minimise the adverse effect of this legislation on jobs.”

HMRC are currently running a backlog of up to five months for the issuing of VAT numbers. Previously firms were registered for VAT within two weeks. HMRC have commented that 70% of those who register for VAT are dealt with promptly. However, UHY Hacker Young have stated that it is now commonplace for long delays due to anti-fraud checks being carried out.

Previously, companies awaiting VAT numbers during backlogs have been advised to use proforma invoices and advice clients that they will re-issue formal VAT invoices once their number has been received. However, VAT cannot be invoiced for separately as it is against the law for a company to charge VAT when they are not registered. Therefore any fees charged should be enough to cover VAT liability.

Simon Newark, VAT partner at UHY Hacker Young stated: “HMRC staff conducting the fraud checks routinely disregard information contained with the applications and demand the same documents, which are often completely irrelevant, again and again. When I made a formal complaint I was told that because all taxpayers were being equally disadvantaged, no individual taxpayer had grounds to complain that he was being unfairly treated.”

Mr Newark commented: “The backlog at HMRC has never been worse, despite assurances over the last few years that the issue was being resolved,” These delays are causing serious problems for small businesses trying to start up in a tough business environment and are hampering wider economic recovery.”

As this year progresses, it would seem that demand for IT contractors is also progressing. Speaking to Contract Eye, IT recruitment agency CV Screen reported that they has seen demand for IT professionals rise by a staggering 23% during the past three months. During the same period, the agency noticed that there was less applicants per job, equating to a drop of around 25%. Back in May, the agency received an average of 109 applications per position in comparison to an average of 68 in September.

Matthew Iveson of CV Screen commented to Contract Eye: “We’re hopeful that the IT Jobs market is over the worst with an encouraging increase in the number of roles registered in quarter three. We are now seeing confidence returning to the IT jobs market. Many IT professionals had put their career aspirations on hold due to the economic climate are now beginning to test the water.”

“With unemployment rising and the economic climate bleak, many IT professionals sensibly decided to remain with their current employers until the market improved. There are early signs that these candidates are beginning to seek new opportunities where better training, salaries and long term career opportunities are on offer.”

Iveson ended on a positive note: “With confidence gradually returning to the industry, we fully expect that by early next year the IT Jobs market will be returning to pre credit crunch levels.”

A new report has been published which shows that It contractors in the UK continue to be disadvantaged by incredibly slow broadband internet speeds, in comparison to most of the other European countries.

The was a joint research project between Oxford University and the University of Oviedo which is based in Spain. The research was conducted on behalf of Cisco. The results showed that of the 66 countries that they examined worldwide, Britain’s broadband infrastructure was ranked number 31.

In fact, findings from this research report that many households in Britain still cannot gain broadband speeds of 2Mbps. Britain is therefore overshadowed by the broadband infrastructure of South Korea, Bulgaria, Latvia, Denmark and Holland.

The report also questions the ability of Britain’s broadband to compete in the years to come, stating that it was only just “meeting the needs of today”. This effectively means that if there is no future investments into increasing speed and bandwidths, then It contractors in this country could be left struggling. Technological advances, including high definition video, may require speeds of up to 11Mbps.

Speaking to the BBC, Joanne Hughes from Cisco said: “We forecast the UK will improve because of things such as cable networks being upgraded and the Digital Britain report focusing on next generation access.”

It has already been reported that Britain may soon see the introduction of a tax for broadband users, equivalent to around 50p per month, in order to finance the development of Britain’s next-generation broadband.