Crystal Umbrella

OSR Recruitment Services has responded to an article which was published in The Mail on Sunday which reported that they had supplied Polish workers to a meat producing factory purely because they could speak Polish as ‘out of context.”

Forza AW, who supply cooked meat to Asda supermarkets were being accused of anti-British discrimination as the adverts for their vacancies via OSR Recruitment stipulated that applicants should speak Polish even though the jobs were based in the UK.

A statement released to The Recruiter from OSR stated: “OSR wish to make comment that following the very short notice it received from the client that they needed workers to start at this site as soon as possible, we were also informed that the latest inductions were being performed by the client in Polish. Therefore, we looked to initially place Polish-speaking workers with this company for obvious reasons.

“We should like to point out that there is nothing illegal about this type of positive selection criteria in such circumstances where reliance on health and safety briefings (for example) in factory settings are crucial and should, wherever possible, be made to persons in their first language.

“OSR therefore believes that the story as reported was ‘out of context’ and wishes to correct the misinformed suggestion that only Polish workers are being selected to work for this client; this is absolutely not the case.”

The Chancellor presented his Budget last week and industry and society have been left analysing what the after effects of this Budget will be. Now, the Forum of Private Businesses has conducted a snap poll which has found that 95% of smaller businesses feel disappointed by last week’s budget. Only 5% of respondents feel that their businesses can develop under the conditions laid out by Mr Darling. A further 87% actually stated that these conditions will do nothing to increase consumer and business confidence despite a thriving business community being a priority due to the country struggling to recover from recession.

Speaking about the results of their snap poll, chief executive Phil Orford commented: “This research appears to support our initial assessment of the Budget – overall, it fell far short of what we were hoping for and there was a sense that it was very much a Budget for the election. Judging from the feedback our members have given us, smaller firms don’t feel that the Chancellor laid the foundations for a better environment in which to do business. At the same time, they’re not taking the Budget too seriously because of the imminent election.

He concluded: “However, there were some specific measures included in the Budget which should help some SMEs – things like the creation of a credit adjudicator for small firms, the extension to HMRC’s Time to Pay scheme and new targets aimed at helping small businesses get more public sector contracts. As long as they are administered properly, these schemes should provide tangible, on-the-ground support to smaller firms and the Forum’s members appear to appreciate that.”

New guidance from HM Revenue and Customs states that payments made by cheque will require to have cleared by the due date in order to avoid penalties being charged. This policy will come into effect on 1^st April. This now means that irrespective of the date that the cheque is actually received by HMRC, the payment will only be considered to be on time if it clears on time.

In a press release, chartered accountants Kingston Smith said: “If you are posting a cheque to HMRC, you should allow enough time for the post to arrive and for the cheque to clear. With businesses now relying on HMRC’s efficiency to bank their cheques promptly, electronic payment methods are likely to look much more attractive.”

Kingston Smith’s VAT partner, Adrian Houston, actually pointed out the inequity between the processes for electronic payments and cheque payments as those paying electronically usually have a grace period of seven days following the due date whereas those paying by cheque will now have to make the payment seven days in advance.

Another change due to be implemented on 1^st April requires any businesses who have an annual turnover of £100,000 or more to file and pay their VAT return online from now on. This rule will exist even if the business’s turnover drops below this threshold.

Houston concluded: “Most of the traders paying by cheque after April 1st will be small in size and number [so] this new measure is likely to go unchallenged and HMRC will get its wish i.e payment by cheque will become a rarity.”

The Chartered Institute of Taxation has sent a letter to the Chancellor of the Exchequer requesting that he does not rush through any taxation changes without the necessary scrutiny in parliament. As the date of the election has now been set as 6^th May, CIOT are concerned that the Finance Bill will be rushed through without due care for any possible consequences. They have asked the Chancellor to ensure that he only includes any measures which are absolutely necessary in terms of raising revenue. CIOT have asked that a post election Finance Bill be considered for more complex taxation changes.

CIOT President Andrew Hubbard stated in his letter: “The CIOT strongly believes that good tax law requires close examination and detailed scrutiny, from parliamentarians and from outside experts. In particular this is to ensure that the legislation does not have unintended negative consequences. A Finance Bill rushed through all its stages in a single day does not allow for this – especially in the final days of a Parliament when most MPs’ minds will, understandably, be elsewhere.”

Back in 2005, the pre-election Finance Bill resulted in 106 clauses which were rushed through the necessary parliamentary processes in just four hours. Only the first 13 clauses received any debate.

May 5^th is the cut off date for Income Tax renewal, which is require din order for income tax to be collected. However, this can be postponed for 3 months through Budget resolutions until such times as the Finance Bill passes. The difference is, this extension does not apply when a dissolution of Parliament occurs as is the case this year with the upcoming General Election.

Many IT contractors will be feeling the effects of some of the announcements made in yesterday’s Budget. Alongside the Chancellor’s unveiling yesterday, a press notice titled ‘Protecting Tax Revenues’ was also released. This announced fresh attacks on offshore and payroll schemes that are designed to exploit loopholes in tax legislation. The press notice stated: “The government is taking further action to change the game for those seeking to bend or break the rules on tax.” To this end, legislation will be introduced from 6^th April 2011.

Commenting on this development, consultant365.com’s Ray McMahon told Contractor UK: “There has been an increase in these schemes, which offer increased take-home pay by various methods, over the recent years. It appears ‘disguised payments’ is an area the government wants to tackle. Businesses have just over 12 months to consider whether to continue with these schemes”.

The notice also details plans by the government to take action on any other vehicles where employment income is not properly taxed. The Chancellor also made clear his determination to clamp down on those individuals not paying tax on their offshore gains and income.

Mr McMahon commented: “Where people have moved their money ‘offshore,’ HMRC will consider settlements with tax geared penalties which could be increased up to 150% or even 200% of the liability.”

Mr Darling also made it clear that he plans to stop any companies taking advantage of the double taxation treaties in this country by over-claiming tax relief. New measures will be introduced to combat this issue from the 1^st April, including “principles-based approaches to protect Exchequer revenues.”

Schemes offering contractors maximised take home pay are also under scrutiny and stricter measures. The notice said: “ a measure countering avoidance involving the release of loans to participators by close companies [so]…close companies will be denied a corporation tax deduction for releases or write-offs of loans to participators.”

Mr McMahon warned: “This comes into force from today. [It will apply] where a director takes a loan from the company and then it is written off. Although there was a benefit and NICs to pay, it was considerably less than having to pay off the original loan.”

It is expected that this combination of measures on avoidance and evasion will raise an extra £1.5 billion, with an expectation of £4bn by 2012-13.

Many businesses will, however, be pleased to acknowledge that the Time To Pay facility will actually remain for the next five years.

Martin Hesketh of contractor accountancy firm, Brookson said: “”The Budget was quite friendly to business in terms of small and medium-sized enterprises, but it wasn’t particularly great for freelance or contractor companies. That said, the measure that seems directly to benefit contractors is the extension of the Time to Pay scheme, assuming contractors are in trouble with cashflow and need extra time to pay.”

HMRC have also confirmed that their Employer Compliance Review has been re-engineered. This is the route which is normally adopted during an IR35 investigation. Bauer and Cottrell stated: “HMRC say that they are on target to reduce audits and inspections by 15% by 2011. This is all clearly in line with the marked reduction in investigation work and IR35 cases over the last 18 months.”

As contractors await the Chancellor’s Budget today, managing director of accountantcy firm Brookson, Martin Hesketh, has stated that he believes Alistair Darling must pay particular attention the effect of his Budget on Britain’s flexible workforce.

Mr Hesketh wrote: “The chancellor Alistair Darling faces a tough day on 24th March as he delivers a budget upon which Labour will be judged in the next general election, potentially weeks away. The Pre-Budget Report in December was set against the backdrop of an extremely negative economic climate and even though consumer confidence appears to be returning, the British economy is still very fragile. There’s no dispute that more needs to be done if the Government continues to pledge it will halve the budget deficit in four years, but with a general election so close, I have my doubts as to whether Mr Darling will deliver further blows to the general public.”

He continued: ““However, I wish the same could be said for professional, skilled consultants and the flexible workforce. The Government continues to view the consultancy community as a relatively small number of people which is not the case. In December 3.25m* people in the UK were freelance professionals. The economic downturn forced companies to rely on contractors and flexible workers during the toughest periods of the recession as full-time staff were shed. So while the Government calls for skilled professionals to step forward they contradict themselves by continuing to target self employed and high earners with hefty taxes. If the Chancellor decides to further increase income tax on salary brackets under £150,000 the consequences would be highly detrimental to the economy and growth of a skilled UK workforce.”

Mr Hesketh concluded: ““The pre-budget report proved that the Chancellor falls back on the approach of taxing the wealthy, but with a general election looming, whatever decisions he makes will undoubtedly come under further scrutiny.”

A court case last week revealed that Nigerian, Modupeola Fatoyinbo was employed illegally at the Houses of Parliament. She was originally employed as a casual catering assistant but was later offered a permanent position at which point she produced a counterfeit passport as proof of identity.

Peter Zinner, prosecuting, stated: “To gain access to the relevant department, she had been issued with a visitor’s pass, and she would be met by a member of catering staff, who would escort her to the department. The result of this was that she was working in a secure area without being security checked.”

With regards to the passport, he said: “It was found to be a false, counterfeit document, containing a counterfeit Home Office leave to remain in the UK and permission to do work.” Ms Fatoyinbo admitted that she had paid £170 for the passport.

As he jailed her for four months, Judge Andrew Goymer stated: “These are serious offences, which undermine confidence in the management and identity control systems of this country. People must expect to go to prison for such offences. I bear in mind that you are of previous good character, and have two young children. I have also been told that you pose no security or terrorist threat and as far as I’m aware, you did not present a security risk to the Palace of Westminster.”

The judge made no recommendations regarding deportation as Ms Fatoyinbo is seeking asylum for her and her daughters.

A dawn raid at Scanwell Freight Services in Hounslow on Monday 8^th March resulted in officers from the UK Border Agency arresting 14 people. Eight male employees were arrested on a number of immigration charges. The firm, based in Amberley Way, can now expect to be fined up to £90,000 for employing these eight men, and possibly a ninth member of staff although further investigations need to be carried out to see if the necessary checks were actually made.

The other 6 people were arrested following subsequent searches at addresses in Southall and Hayes. Of those arrested, an Indian woman, five Indian men and a man from South Africa are currently being detained pending deportation. The UK Border Agency is seeking travel documentation for the other seven who are currently on bail.

Speaking of this operation, The head of the Hounslow Local Immigration Team, Ben Kelso, commented that this was part of an ongoing clampdown by the UK Border Agency, saying: “Illegal working has a serious impact on communities, taking jobs from those who are genuinely allowed to work. We are happy to work with businesses to ensure they know what checks have to be done on staff, but those who do break the law will face action.”

Any business who is found to be employing workers illegally can face charges of up to £10,000 per illegal worker. Further information about which checks to carry out before offering employment can be found at www.ukba.homeoffice.gov.uk or by calling 0300 123 4699.

The country is waiting patiently for the Chancellor of the Exchequer to deliver his Budget Report on Wednesday 24^th March, particularly in light of its proximity to the expected general election in the coming months. However, contractors who are hoping for to benefit from in this Budget will probably be left disappointed. IR35 has long been a contentious issue but despite the oppositions pledge to overhaul the taxation system to make it fairer for all, it is unlikely that Alistair Darling is set to follow suit. In fact, in terms of taxation, it would appear that the only changes in the imminent Budget will be a delay in the planned rise in Corporation Tax for small businesses. Contractor groups have been lobbying on the issues relating to IR35 and compliance for some time now but, as yet, these campaigns have failed to effect change.

It seems the reason tax cuts are particularly unlikely to be announced next week is due to the massive debt currently strangling the UK’s finances. The Prime Minister has already spoken out to confirm that there is a need for the public sector to become more efficient but the likelihood is actually that this means there will be large cuts in public spending, although such announcements will probably be made after the election, therefore will be dependent on which political party is in power. As of next week, we will have a better idea of the financial position over the coming twelve months if Labour win another term.

The increased demand for IT contractors is behind the recovery in London’s financial district. The number of contract offers for IT freelancers in the City last month was only slightly lower than twelve months ago, showing an unparalleled “revival” in the demand for IT services, according to Alexandra Kelly of Powerchex.

Speaking to Contractor UK, Ms Kelly stated that there was an increase of 57 per cent in the number of offers made to IT contractors between January and February.  She continued: “It is fairly normal to see a small increase in job offers around this time, especially amongst IT contractors to the financial sector. As we come towards the end of the financial year, managers tend to revive non-vital projects as they realise they have money left to spend in their budgets.”

There has also been an increased demand for stockbrokers and investment bankers, although Powerchex found that the demand in these areas was lesser than in IT, at around 30 per cent and 20 per cent respectively although there was actually a decrease in job offers to investment managers and hedge funds. However, on the whole, recruitment throughout the financial sector rose by six per cent between January and February.

There is still a long way to go in terms of full recovery in this sector, though, with most investment management firms still “treading especially carefully when it comes to recruitment.”