With just over two weeks until the general election, leading contractor accountant Kate Cottrell takes a look at the main parties’ manifestos, and in particular any promises for contractors and IR35.

It was only a matter of time before HMRC launched an all out attack under the Managed Service Companies legislation – it would now seem that time is up! Some of the big providers have already fallen and the rest will soon come under fire.

We are aware of HMRC plans to offer medical professionals a disclosure opportunity in respect of unpaid taxes. The Tax Health Plan will allow medical professionals the chance to disclose any arrears and settle them with interest and a ten per cent penalty.

With Christmas just around the corner, it’s seems the Government have thrown themselves well and truly into the festive spirit. Umbrella company contractors will be pleased to hear that the new rates for maternity, paternity, and statutory adoption pay will rise from £123.06 per week to £124.88 from 4 April 2010.

At one point it seemed as though HMRC’s radar was focused solely on the Construction Industry, but now their gaze has fallen hard and fast on limited company contractors (yet again). In the last month Accountax have seen a 162 % increase in the number of IR35 enquiries instigated by HMRC.

With the PBR set for 9 December, it will be interesting to see what changes the Chancellor makes to help struggling contractors, operating either via their own limited company or through umbrella companies.

The quick answer is that it doesn’t in the slightest and has no impact on your take-home. Any company that repays business expenses to its employees has to account for how that money is spent and how the associated VAT has been dealt with. The usual way to do this is via some kind of proof of purchase, usually in the form of a VAT receipt or payment slip.

Umbrella companies have been around in one form or another for a while, but only really came to prominence with the advent of IR35 in 2000. The idea is that if, under IR35, you are going to be paying taxes at the same level as a permanent employee, why have the additional hassle of running your own company, or of being employed by the agency with the limitations on finding work that implies.

So having decided to go with an umbrella company, the next problem is to choose one. There are many to choose from and you need to do some research.

On Remembrance Day I had an appointment with senior officials of HMRC in Parliament St London – a stones throw from the Cenotaph. The meeting was concerning the coding of expenses incurred in travelling to temporary workplaces.