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The Cabinet Office and key industry figures have joined together to combat ongoing problems faced by IT contractors with regards to security clearance. Contractor group PCG told how many contractors are required to have clearance before they can even be considered for work.

John Brazier, PCG managing director, believes that such practice has a detrimental effect on the recruitment opportunities available to contractors. This sentiment has been echoed by cabinet minister Angela Smith, who said: “National security vetting controls are important, but must be applied proportionately and fairly. Where security clearances are necessary, an existing clearance should not be used as part of the selection criteria or inhibit access to jobs, except in rare cases where a contract is urgent or very short term.”

Director of REC, Tom Hadley, echoed: “Contract jobs in sensitive areas may require a security clearance; however this should not be seen as a pre-requisite for the posting. In many cases clients can wait for a candidate to be cleared and it is important that these jobs are open to as many contractors as possible.”

Speaking to Contractor UK, Mr Brazier concluded: “At the same time the Cabinet Office has written to the biggest 250 agencies in the country to draw their attention to this issue and remind them to observe best practice as well as having the guidelines published on the website of the Office of Government Commerce.”

Any concerns regarding security clearance can be relayed to the Cabinet Office at vettinggroup@cabinet-office.x.gsi.gov.uk.

PCG, who represent contractors and freelancers in the UK, have now given their response to the landmark BN66 ruling at the High Court. The case centred around IT consultant Robert Huitson making a challenge against HMRC’s right to claim taxes retrospectively. Mr Huitson’s lawyer had argued that the retrospective tax levy was a breach of his human rights. Mr Justice Parker, presiding, disagreed stating that HMRC were within their rights to challenge users of artificial schemes and such individuals were given warning that this could be the case. There has since been widespread concern throughout the industry that this decision will open the doors for further retrospective tax liability.

On their website, PCG chairman Chris Bryce responded: “Whilst we recognise that the High Court Judge has clearly set out his reasons for upholding the 2008 Finance Act which allowed the Revenue to claim back this tax retrospectively in this particular instance we share a common concern with all taxpayers that this judgement may be seen as opening the door to retrospection.”

He continued: “For a seven year period up to 2008 HMRC failed to take any action before the law was changed, despite being well aware of these arrangements.  Whilst PCG in no way encourages off-shore tax arrangements we object in the strongest terms to taxpayers being retrospectively penalised for arranging their tax affairs in a way which was entirely legal and proper at the time they undertook to do so.”

Mr Bryce concluded: “I note our concern with retrospective taxation is widely shared.  PCG will continue to watch this area very closely. HMRC must not feel this is a green light to retrospectively challenge other, entirely legitimate behaviour.”

PCG, the body representing freelancers and contractors, have commented on the EU 2020 consultation. They have stated that they welcome the objectives of the strategy. EU President Barrosso has set in motion plans for a more sustainable social market economy which should result in a better use of resources, skills and knowledge. The strategy for turning this ideology into practice is the EU 2020 Strategy. The consultation period on this strategy commenced in November and ended on 15^th January. PCG submitted their comments to the EU Commission and highlighted the need for wider recognition and promotion of freelancing as a career option.

The Commission is due to submit their proposal in the next couple of months. It is expected that the governments and EU Heads of State will adopt the EU 2020 Strategy at their Spring 2010 meeting.

Managing director, John Brazier, said: “It is important that European policy-makers fully familiarise themselves with the freelance model of working, which is already bringing benefits to the UK economy. By taking on risks in exchange for higher rewards, freelance professionals represent the dynamic and flexible workforce that Europe needs to thrive in the future.”

He continued: “Freelancing is an active choice mainly motivated by the desire for professionals to run their own business and secure a better work-life balance. The European Commission should consider it as an innovative solution to tackle unemployment and foster social inclusion, especially among young people and those over 50”.

As part of the celebrations for National Freelancers Day, the Professional Contractor Group has called for “fairness, clarity and recognition” as it launched its ‘Manifesto for Freelancing’ at a House of Commons reception on Monday. This reception was attended by key figures from the three main political parties alongside PCG members and other prominent stakeholders in freelancing.

John Brazier, managing director of PCG stated: “Freelancers bring a degree of flexibility and a skill set to the economy which is a real asset for UK plc. This Manifesto clearly outlines the key messages the major parties need to adopt, in order to allow this vital part of the economic landscape to flourish”.

Brazier commented further: “We know that freelancing is helping business cope with the worst recession we have seen for 60 years.  But this has to be a fair deal.  Freelancing must be recognised as a legitimate business model.  Measures such as IR35 continue to place an unfair burden on nano-businesses.  If we’re serious about growing an enterprise-friendly economy we need to address these faults in our tax system urgently.  We will be continuing in the run-up to the election to take this message far and wide.”

The manifesto involves five main themes; fairer taxation, better regulation, recognition of freelancing as a valid way of working, positive vision for the future of freelancing and easier access to the market. The full manifesto is accessible via the PCG website.

In conclusion, John Brazier said: “This Manifesto demonstrates just how far PCG has come as a credible lobbying organisation in its ten year history.
Our first, but by no means our last manifesto will prove a clarion call for change, urging the next government to protect and advance the interests of this vital, vibrant and growing part of the UK’s economic landscape”.

Contractor accountancy and tax services provider Brookson have hosted a ‘Future of Freelancing’ Round Table debate which was attended by Director of APSCo Marilyn Davidson, managing director of PCG John Brazier and Andrew Miller MP amongst others and was chaired by Martin Hesketh, managing director of Brookson.

They looked at all manner of issues affecting freelancers including the impact of the recession, government not fully understanding the freelancer role, the role of freelancers in the recovery of the economy, sector comparisons, technology and the debate regarding definitions.

Mr Hesketh commented: “Despite a surge in the last 20 years or so, freelancing is still a relatively new model of working and as such, is changing and evolving with increasing speed. In light of the current unstable economic landscape and ongoing debate around existing and proposed legislation, we thought it was important to bring the industry together to review how the future of our industry is currently being affected and shaped.

He continued: “The future, it seems, does appear bright for self-employed professionals. Granted, there are some hurdles still to overcome, not least of which is the argument around categorisation of types of freelance worker and the one size fits all approach to industry imposed legislation. However, our discussion highlighted a number of promising developments which would indicate, that with the right support, the freelancing market will continue to recover, grow and expand in years to come. Perhaps surprisingly, engineering appears to be the most robust sector within the market place. In September this year, the number of contracts in this sector shot up by around 40 per cent, yet IT has not followed suit.

Hesketh concluded: “The discussion also highlighted some interesting points around age polarisation within the freelancing market, in terms of a greater number of freelancers from the graduate generation and older generations. For graduates, this was attributed to an increase in exposure to successful entrepreneurship. For the older generations, an increase in redundancies coupled with a desire to extend working life time-scales, has led to a growing number of freelancers from this age group.”

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.”

The Professional Contractors Group (PCG) are set to request immediate clarification from HMRC regarding a recent article which appeared in the Daily Telegraph. The piece in question suggested that tax inspectors could be set to get tougher on individuals before they have actually broken the law.

The specific section of the Daily Telegraph article about the definition of tax avoidance, read: “Avoidance is not defined in the Taxation Acts…One definition is ‘a situation where less tax is paid than Parliament intended, or more tax would have been paid, if Parliament turned its mind to the specific issue in question’. At a practical level the problem is then essentially one of deciding what Parliament would have intended and identifying who should be asked to decide this”.

Chairman of PCG, Chris Bryce, responded: “Clearly if this is a new departure for HMRC we are very concerned. HMRC must act within the law of the land. Our legal advice is that if HMRC ever did take anything to court on these grounds it would be thrown out and fined heavily. The suggestion that tax inspectors should pursue people who have arranged their financial affairs in perfectly legal ways based on a retrospective analysis of Parliament’s collective thinking is outrageous. Minimising one’s tax bill is a perfectly legal and proper course of action. These new guidelines, if true, strike one as Orwellian in the extreme.”

Bryce confirmed that the Group would be seeking further explanation from HMRC.

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.”

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.”

The Professional Contractors Group has arranged the National Freelancers Day which is to take place on 23^rd November. This will become an annual event. The aim of the event is to celebrate the work carried out by freelancers and contractors, often considered the ‘third way’ to work.

John Brazier, managing director at PCG said: “We wanted to establish a special day for all freelancers so that on National Freelancers Day this third way of working is recognised and we can celebrate the talents, achievements and worth of freelancers up and down the country.”

National Freelancers Day will operate under the five themes which PCG believe are key to optimum working conditions for contractors. These are: the right to work freelance, fair and equitable taxation, recognising that freelancers are in business on their own account, Government assisting the relationship between contractor and client and the respect of contractors for their contribution to the economy.

Brazier commented: “We have seen a significant increase in the number of people opting to go freelance over the last ten years and today there are 1.4 million freelancers in the UK. PCG wanted to establish a special day for them and on National Freelancers Day we can recognise freelancing and celebrate the talents, achievements and worth of freelancers up and down the country.”

On the day a ‘Manifesto for Freelancing’ will be drawn up which PCG then deliver to candidates standing in the next General Election.

More information can be found on the official website www.nationalfreelancersday.org.uk