Crystal Umbrella

The Chartered Institute of Taxation (CIOT) believes that the ‘Taxpayers’ Charter’ implemented by HMRC is extremely important with regards to the relationship between taxpayers and the taxman. The Charter was drawn up following this year’s Finance Act and it has now been officially launched. As a result, taxpayers can now expect to be treated fairly and with respect. There is also a responsibility on HMRC to explain decisions and rules and to ensure that any errors are rectified quickly. They also must make sure taxpayers are aware of their rights at all time.

The Charter was launched by the Rt. Hon. Stephen Timms MP who is the Financial Secretary to the Treasury. CIOT Tax Policy Director, John Whiting, spoke at the launch. He said: The Charter is an important step forward in relations between taxpayers and the taxman and will help people in their dealings with HMRC. It is a key signpost and safeguard for taxpayers, particularly for those who do not have an adviser.”

He continued: “The Chartered Institute of Taxation has been very active in calling for a Taxpayers’ Charter and we are delighted that the final Charter reflects many of our proposals for what it should include. The first draft of the Charter was deeply disappointing and wholly inadequate but HMRC deserve credit for listening to representations from ourselves and other tax professionals and producing a much improved final text.”

In conclusion, Whiting stated: “Implementation of the Charter is crucial. I am delighted that the Financial Secretary has shown his own commitment to the Charter by personally launching it. It is important that it is properly publicised throughout HMRC, among tax advisers and among taxpayers generally. The CIOT are committed to playing our part in this.”

Following UK based economists Markit’s confirmation of recovery in the IT sector, the Monster Employment Index figures for October confirm that employment opportunities in the sector rose higher than they have over the past eight months. This Index counts the millions of job adverts online across all sectors.

Hugo Sellert, head of economic research at Monster Worldwide, said that it was too early to draw conclusions that hiring trends have completely turned around in the IT sector. He pointed out that in comparison to this time last year, IT vacancies have dropped by 23%. In fact they have dropped since 45% since their highest point in February last year. Mr Sellert confirmed that last month IT vacancies actually bottomed out. Vacancies are increasing at a relatively slow rate and redundancies are continuing.

Sellert stated: “Labour turnover typically falls during economic downturns as employees perceive it more difficult to get another job, and therefore tend to stay in their current position. As signs of optimism return to the economy, more workers consider changing employment, thereby creating a higher need for replacements.”

While other surveys have confirmed a rise in hiring intentions, Sellert suggests that “it could take some time” before this translates to online vacancies. This is coupled with extensive candidate availability due to the number of layoffs which have occurred in recent months. This is backed up by data from TotalJobs.com who report 148,000 applications across 15,000 IT jobs advertised in September. This is not an increase in users of the site, but there has been a decrease of around two-thirds in employment opportunities in the sector over the past twelve months.

UK-based economists Markit have commented that the demand for IT contractors has risen to its highest level since the economic downturn took hold in April of last year. Speaking to Contractor UK, Markit stated that their index shows that the demand for IT contractors in October was at 53.8, the highest level in 17 months. The demand for permanent IT staff had also increased, peaking at 51.5.

Markit’s index uses 50 as an indication that there has been no change, therefore a figure above 50 denotes an increase and below 50 shows deterioration. One of their economists, Jack Kennedy confirmed that this increase in demand for IT workers is the result of the sector benefiting from “broad based stabilisation”. He also attributed the improvement to reported shortages of software developers, CNC programmers and specialists in Sharepoint and .Net. He also stated that companies now seem to be eager to put their technical projects into operation, after being put on the backburner for months during the recession. This is shown in the increased demand for permanent and temporary IT staff.

The REC also confirmed a growth in contracted IT positions rising to its highest level in sixteen months. However, in comparison to other sectors, the increase in IT demand was the least marked. Also, pay rates for IT contractors have continued to decrease although they are no longer decreasing at such a fast pace.

Contractor services provider Giant Group PLC has made its views regarding the Agency Workers Directive known. They believe that contractors should be excluded from the legislation depending on how much they earn and that the business model within which they work should be irrelevant.

The Agency Workers Directive is being introduced to protect vulnerable agency workers, awarding them equal rights to permanent employees once they have worked with a client for a twelve week period. Giant states that the main problem with this is that the most vulnerable agency workers will be forced into limited company structures by unscrupulous operators.

As it stands at present, Government proposals for the implementation of the EU Directive are set to include contractors who work through an umbrella company while excluding limited company contractors.

Giant has proposed that the scope of the AWD should be based upon wages, with workers earning less than three times the minimum wage protected under the Directive. This would mean the most vulnerable are protected while high earning contractors are free to work without AWD regulations affecting their work prospects.

Managing director of Giant Group, Matthew Brown, stated: “One of the main purposes of the Directive is to protect ‘vulnerable’ temporary workers. The most meaningful way to distinguish ‘vulnerable’ workers from other workers is by income. It is therefore illogical to include or exclude temporary workers from the Regulations on the basis of the corporate structure through which they operate without any reference to how much they earn.”

The Professional Contractors Group (PCG) has written to the chancellor, Alistair Darling, ahead of his pre-budget report with a list of three demands. They are requesting that he scraps IR35, provides a less restrictive business model for freelancers to work within and drops ‘income shifting’ rules.

The PCG informed the chancellor that the recession has had a negative effect on those who work freelance, with a 12% fall in those working over the past year and an average drop in turnover of around a third.

Writing to the treasury, Mr Bryce, chairman at PCG acknowledged the pressure on Mr Darling regarding this pre-budget report given the current economic climate. However, Bryce stated that freelancers are not given a “fair deal”. He called IR35 “the largest single impediment to freelance working” and demanded that it be withdrawn.

Bryce wrote: “We know from past statements by ministers that IR35 is not known to be a revenue-raising measure. It is not clear that such monies as it raises in extra tax offset the considerable expenditure by HM Revenue and Customs in pursuing the many fruitless enquiries known to us.”

PCG also explained to Mr Darling that the current restrictive rules mean that, without a legal form, agencies are unable to pay freelancers gross.

He wrote: “PCH would like to see this measure abolished: it is a clear example of a tax measure distorting market behaviour, contrary to the government’s own express desire that the ‘tax tail’ should not ‘wag the business dog’”.

With regards to the proposed family business tax, Bryce said: “We welcomed the decision in last year’s Budget ti again postpone the introduction of legislation regarding ‘income shifting’, but we reiterate that it is essential these proposals are dropped completely with immediate effect. Treating jointly-owned businesses any differently to other businesses is iniquitous and unfair. These proposals fail to take into account the shared risk and responsibility involved in running a business, and would harm thousands of such enterprises.”

This week Parliament is set to put plans in motion to roll out identity cards for non-EU nationals who extend their UK stay past six months under Tier 2 of the points-based immigration system. This would be effective from January 6^th 2010. Already, the UK Border Agency has issued over 100,000 identity cards mainly to students extending their stay or to spouses.

Originally identity cards for Tier 2 applicants was set to be rolled out next Spring. However, the Home Secretary requested that the UK Border Agency accelerate the implementation. Accordingly, the UK Border Agency have also made recommendations that the implementation of Tier 1 and 5 identity cards should be accelerated along the same time-scales. All foreign nationals subject to these regulations will be required to have their biometrics, e.g. photograph and fingerprints, taken when they wish to extend their stay.

Systems are now being put in place to ensure that facilities are available for enrolling these biometrics since the UK Border Agency has made a pledge that they will issue a further 75,000 cards by the end of this month. Currently biometrics can be enrolled at four UK passport offices and also at the UK Border Agency’s own offices. Appointments for this service can now be booked online, as can premium appointments for those not subject to the biometric system. However, negotiations are continuing for biometric enrolment to be offered at selected Post Office branches. This will be a walk-in service and details will be sent out with relevant biometric enrolment notification letters.

The Apprentice’s Lord Alan Sugar has come under fire for comments he made; declaring many business owners as “moaners”. The business and enterprise tsar’s remarks came as complaints about the lack of bank lending to small businesses are on the increase. Sugar stated that the majority of complainers had no grounds to grumble. He also dismissed young business owners who, he said, were only used to the “Disneyworld” lending over the last ten years.

His comments have been criticised by the Forum of Private Business (FPB) as “misguided”. Their chief executive, Phil Orford, stated: “Sir Alan’s comments were quite insensitive and completely erroneous on several points. Contrary to Sir Alan’s comments about younger entrepreneurs harbouring unrealistic expectations about credit, I can tell him that many of our members are similar in age to him – they are in their fifties and sixties and they have lived through several recessions. Yet they are still deeply unhappy with the restrictive lending conditions and the increased lending costs which have been imposed on them over the past 12 months.”

He continued: “Secondly, his view that banks should be free to do what they please and shouldn’t be lectured to by the government misses the point. The financial bail-out used a vast amount of taxpayers’ cash and we will all be paying the price for years to come through higher taxes and public spending cuts. So it’s not surprising if business owners feel as though they should be seeing a little more support from the very institutions they helped to save from collapse.”

Orford concluded: “Sir Alan is of course a celebrated rags-to-riches success story who started his business empire from his family’s East End flat. But perhaps his £700 million fortune has dulled his memories of running a small firm and lessened his understanding of the very people the Government hired him to represent.”

HMRC has now revised the contract that it holds with Capgemini and other major sub-contractors such as Accenture and Fujitsu. Known as the Aspire contract, this agreement is for IT provision with particular emphasis on reducing HMRC’s IT running costs until 2017. The revised agreement aims to save HMRC £110 million per annum.

A programme of standardising systems and investments in newer technologies is set to meet the needs of HMRC while driving down costs. These savings should be evident from 2011-2012 tax year.

The agreement means exclusivity for all Aspire service providers until 2013.Also Capgemini have extended their involvement with HMRC to include acting as procurer for all office IT equipment.

Chief Executive, Permanent Secretary for HMRC, Leslie Strathie said: “HMRC and Capgemini have worked together to achieve outstanding savings for the Department. This is just one of the ways HMRC will be reducing operating costs and it signals the intent to bring IT costs down as announced in the 2009 Budget.”

CEO of Capgemini Aspire, Nigel Martin commented: “The latest change to the Aspire contract has been made possible by collaboration both with HMRC and Capgemini’s Aspire partners particularly Fujitsu, our core infrastructure partner, and Accenture. Together we’re helping HMRC respond to a challenging environment and our flexible contract is continuing to set the standard for all outsourcing arrangements five years after it was first signed. The new agreement would not have been possible without our track record of reliable service and up to 200 projects delivered on time and within budget for HMRC each and every year.”

‘What Do Graduates Do?’ is a new survey conducted by the Higher Education Careers Services Unit (HECSU) in association with the Universities and Collesges Admissions Services (UCAS) and the Association of Graduate Careers Advisory Services. This research has shown that the prospects of a graduate facing unemployment are now at their highest level since 1995/6.

The survey was conducted amongst 220,065 graduates from 2008. Of those surveyed, 7.9% were unemployed. This is an increase of 2.4%.

With regards to those graduates who were successful in finding employment, these figures have decreased in every sector. Financial services housed 7.5% of graduates compared with 8.7% the previous year. There was a similar decrease in graduates working within the IT sector.

HECSU chief executive Mike Hill says “We’re now starting to see the extent of the impact the recession has had on graduate unemployment. Despite unemployment increasing, for those who have found a job, salary levels are holding up. Any signs of economic recovery may not be reflected in the destinations of new graduates until the 2010 graduating cohort. In fact it’s likely that unemployment for 2009 graduates may be even higher than that reported here. However, graduates shouldn’t feel disheartened; many organisations continue to recruit, and a degree will certainly remain valuable for many years to come.”

Meanwhile, another new report from Centre for Cities has detailed that 52% of graduates currently work in the public sector. However, it is expected that 290,000 public service jobs will be lost over the next five years.

Dermot Finch, chief executive of Centre for Cities, commented: “In a public spending squeeze, UK graduates will continue to find it tough to take their first step on the employment ladder. This means more private-sector opportunities will be needed to bridge the gap.”

There has been a great deal of dissatisfaction regarding EU directives which affect contractors of late, specifically regarding the implementation of the Agency Workers Directive. However, another directive has emerged which could actually signal good news for contractors. The European Payment Services Directive, which came into force on Monday, means that contactless payments must be introduced throughout Europe within the next twelve months. This means that direct debits must be available for use throughout Europe, including inter-country payments.

This system has become possible due to the introduction of the Single European Payments Area (SEPA) which will negate the need for companies to have separate accounts in the Euro areas where they are conducting business. This was a costly system which often resulted in payment delays.

If all EU member states implement this new system it will mean that UK companies will be able to receive Euro payments into one bank account which can be held in any EU country chosen by that firm. There should be a standard level of service for the firm no matter which country the account is based in.

Capital Consulting commented that It contractors who regularly receive more than one payment per month for work throughout the EU will be amongst those who benefit most from this new directive.

They said: “For contractors working on the European market, this [directive] can only be seen as positive as it will help remove a small but important barrier to international mobility.”

Banks will now have twelve months to ensure that all of their systems are ‘SEPA-compliant’. Some small businesses may also need to alter their existing payment structures to reflect the new directive.