Now here’s an offer you won’t want to miss! Free accounting software! Yes, it’s true; contractors, freelancers and micro-businesses can now use Crunch’s online Solo accounting software completely free of charge.

Crunch Solo (free) has the same features as the company’s premium product. With this free online version of Solo you can do all the normal book keeping tasks such as recording expenses, raising invoices and checking your tax liability. You can’t really get better than that!

Crunch has also launched a monthly subscription version of Solo. It costs a mere £9.50 per month and is actually a scaled down version of the company’s original premium product. It’s designed as a taster package for businesses that aren’t ready to sign-up for a full accounting solution.

If there is a downside to these Solo packages it is that users will literally be flying solo. They won’t get access to an accountant and Crunch will not help them prepare their end of year accounts or deal with HMRC on their behalf. But for the average freelancer who sends out a couple of invoices each month and has little in the way of expenditure, these packages sound ideal.

As Darren Fell, the founder of Crunch explained, the majority of dotcom businesses start off by offering a free service and then announcing costly upgrades. Crunch has done the opposite. It already has more than 2,500 people using the standard subscription package, and by releasing a free version more people can experience the software without committing themselves to a monthly subscription.

The company still offers its complete package that comes with easy to use online software and unlimited telephone support from a team of accountants. For £59.50 a month, this package will also handle HMRC returns on your behalf.

© 2012 All rights reserved. Reproduction in whole or in part without permission is prohibited.

Image: Balloons at the SF Ferry Building by Balloons at the SF Ferry Building

It’s possible that accountants for contractors might have some clients who work in Switzerland. They should therefore be aware that HMRC now treats Switzerland as an EU member state for the purposes of Social Security.

The new rules came into force on the first of April 2012 and apply to anyone who goes to work or live in Switzerland. It will depend on your employment circumstances whether you continue paying UK NICs or pay the Swiss equivalent instead. Swiss employers with UK based staff might also have to pay UK employers’ national insurance contributions.

The new regulations also apply to freelancers and other self-employed people who move between Switzerland and the UK.

Transitional arrangements have been put in place to deal with circumstances where the new rules change the nation that affected individuals pay their contributions to. Under these arrangements it may be possible to continue paying as you were until your circumstances change.

HMRC has advised people who are unsure of how these new regulations will affect them to contact it for advice.

The new rules are similar to those introduced in May 2010 to cover workers who move around the EEA. The UK had originally opted out of the Treaty of Amsterdam and said it would not apply the rules to people coming from or going to Iceland, Norway, Switzerland and Liechtenstein.

The Revenue’s website will soon be updated to reflect the new guidance but in the interim people can phone the NIC&EO International Caseworker helpline on 0845 915 4811 if they need advice.

© 2012 All rights reserved. Reproduction in whole or in part without permission is prohibited.

Image: Biel/Bienne, Switzerland by nikoretro

Accountants for contractors might want to brush up their online skills after Sage reported that online services will be the biggest growth area over the coming 12 months.

41% of the accountants who took part in Sage’s research said they will be focusing on online services for the rest of this year and nearly 75% said their working practices would change over the next three years.

It would appear that only 29% of accountants carry out the majority of their work in the office and now that around 60% of accountants are using devices such as tablets and smart phones, clients are becoming increasingly interested in online collaborative reporting.

However there is a difference in opinion over what services should be available using mobile apps. SMEs think business planning advice, final accounts and financial services should be offered whereas accountants say mobile technology is best suited to bookkeeping, compliance services and tax planning apps.

Jim Scott, the MD of Sage Accountants Division, said that sharing financial information online is a natural progression for entrepreneurs who have been brought up with Apple, Facebook and Google and accountants should take advantage of the opportunities available.

Online accountants need to demonstrate that they understand collaborative working practices and are able to provide them if requested. Not every business is suited to online accounting so accountants and clients must be able to choose the way in which they access data.

© 2012 All rights reserved. Reproduction in whole or in part without permission is prohibited.

Image: Kenilworth Street, Leamington Spa – QR Code by ell brown

One of the few advantages of resting between contracts is that you can go off on holiday without that nagging feeling that you’re throwing away lots of earnings to do so. And yes, I know my rate is annualised to cover such things, but it always niggles. Still, no time like the present so She Who Must Be Obeyed and I are off to far-flung places for a few weeks. Well, some friends are getting married over in Napier and it would be rude not to attend, wouldn’t it?

I will miss a few things though (no, not daytime television). I’m here long enough to see Wales grind England in the mud at Twickenham but I’ll miss the triumphant finale over France (hey, I’m Welsh, we’re natural optimists). I’ll miss the start of the Formula 1 season. And, most importantly, I’ll miss the Budget.

Now the Budget might not seem to be high on most people’s list of desirable things to witness first hand, but this one might actually do something for small business like mine; certainly the last two haven’t so it must be our turn.

It will be interesting to see if the Office of Tax Simplification – remember them? – comes up with anything. More importantly, will the IR35 Forum actually deliver something substantive? Looking at the minutes of recent meetings they seem to be in classic Sir Humphrey mode, failing to take any suggestion forward to a workable proposal. Since they have to report in time for the Budget, I’m guessing that they may have actually had to produce something this time round. They might even manage to work out how to distinguish between a business and an employee, something that is as obvious as the difference between a walrus and a walnut to most of us, but this is a body staffed by people who work in the civil Service so they can’t be expected to understand non-employees.

There is also a faint chance that Cameron and Osborne can agree what they want to do to support UK businesses. Or even that they together will decide that St Vince of Cable is wrong (he is, of course, but it’s worrying they haven’t spotted it yet).

Still, I’ll have my smartphone with me, so I’ll be able to keep up with things from the other side of the globe. Providing I’m not spotted doing so by the management; for some reason she is of the opinion that you don’t do work stuff when you’re on holiday. Most odd…

Ah yes, smartphones. Someone in HMRC has reached the 21st Century at last, and they have realised that a smartphone is not a PDA (remember PDAs – like smartphones that couldn’t make phone calls). As a result they have decided that having a business-owned smartphone can be taxed the same way as a business-owned mobile phone. It’s a small step, but we ought to encourage them; one day they might think of something really worthwhile.

Anyway, you will be spared my ramblings for the next few weeks. When I return it will be to the new utopia of a modern Britain with a growing economy, which recognises freelance contractors as the heroes they are and which has put St Vince back in his box.

Or perhaps not…

© 2012 All rights reserved. Reproduction in whole or in part without permission is prohibited.

Image: Lets Make A Dream by J0GA

Since outing Mr Lester as a tax avoiding monster intent on destroying the UK economy single-handed, the press and the BBC have continued to turn up cases where people are working for the Civil Service in a range of senior roles but who aren’t actually Civil Servants. Gosh, who’d a thought it…

The reason for all this angst is, of course, that these people are not paying the same taxes as they would as employees. OK. And your point is, exactly? That is wrong on so many levels you wonder just how much research these journalists have done.

Firstly the workers are almost certainly paying all the taxes they are due to pay. Contractors – for that is what they are, even those labelling themselves as interims – don’t use limited companies as a tax avoidance device. As I explained last week most of the time if they haven’t got a company or work through an umbrella, they won’t get the work at all.

Secondly, of course, they tend to charge rather more than the equivalent Civil Servant while they are working. So although they may pay a lower percentage than an employee, they will quite probably be putting more back in the revenue’s coffers that the said employee. Plus, of course, when their time is done, they leave with none of the costs that a redundant permie will incur.

So a contractor doing basically a time-bound role is not costing anybody anything; in fact, they may well prove to be more economic. Perhaps that’s why Cameron values the freelance contractor workforce as adding £20bn to the UK economy every year.
But, all that aside, there are still a couple of issues that do need to be cleared up.

The first is that a major benefit of using a contractor to fill a permanent post is that the employer – in this case the Civil Service and related public bodies – is stepping away from quite a lot of costs. They avoid having to pay employer’s NICs for one thing. They also avoid the costs of training, sick pay provision, pensions and a whole heap of incidentals. And that applies whether you’re talking about hotel chambermaids or Programme Directors. Get them off your headcount and you’re saving serious money.

So, question one: how many of these roles are filled by contractors only to benefit the employers?

The second is that the row is basically about people in senior Civil Service roles. Which rather begs the question, why are there not suitable candidates coming up through the ranks to take over these roles as the incumbent moves on? Where is the succession planning that any executive ought to be applying to their own role?

For example, our dear friends at HMRC saw fit to retain their Head if IT (at, it has to be said, a ludicrously inflated rate) when he stood down until a replacement could be found. Secondly the even more esteemed Mr Hartnett is leaving HMRC and being replaced by someone moving sideways from another Department entirely because, according to Hartnett, there are no suitably qualified replacements available.

So, question two: why the hell not?

There are lots of things wrong that have led to this whole bun fight. However, using contractors as a key resource and then bitching about their tax arrangements is not one of them.

© 2012 All rights reserved. Reproduction in whole or in part without permission is prohibited.

Image: Day 280 – Sisyphus by Menage a Moi

There’s been a wonderful example this week of exactly the kind of problem we contractors are faced with when trying to get our point across. A government agency, SLC– which is basically a private firm owned by HMG – was having some operational issues, so they brought in an expert, a Mr Lester, to sort them out. He was proving to be quite good at it, so they offered him a two year deal. Which he accepted. So far, so good.

The original work was done as a bog-standard interim management role: the guy was not employed, he did the job and charged a fee. When the two year deal turned up, he said fine, can you continue to pay me gross to my existing Limited Company and I’ll sort out the rest.

And then it all starts to go a bit wrong.

Someone – doubtless someone with just enough knowledge to be dangerous – asks exactly why Mr Lester has been allowed to avoid paying his taxes. Shock horror! Let’s do a TV programme on it!! This is outrageous!!! Lets’ have a witch hunt and track everyone else doing the same thing!!!!

Yes well, hang on a minute. Firstly we have zero evidence what taxes Mr Lester is paying, since he’s not obliged to disclose that information. There’s no evidence he isn’t paying quite a lot in tax; certainly, like many well paid contractors, a lot more than the average worker. He may even (say it quietly) have declared his earnings under IR35. Who knows?

His is a perfectly straightforward and entirely legal way to operate his company, to share his income with his other half and generally behave like the other 1.5 million freelance workers in the country. Like that chap who earns a million or so a year from public speaking. You know the one, David Milliband, sometime brother and elected, serving MP. Or indeed, the unloved Mr Brown who does the same with his outside earnings, although in his case they all go to charity.

It’s also interesting to note that various senior people had to sign off the arrangement whereby Mr Lester was paid gross. One might think that they had a handle on such things, but I could be wrong. And it’s all a bit moot now anyway, since Mr Lester has done the honourable – if arguably unnecessary – thing and gone on the payroll like the rest of the wage slaves.

But we can glean some interesting insights from this débacle.

Firstly, there are clearly a lot of senior people, including some who are actually in charge of such things, who don’t have a Scooby about how contractors work and how they are paid. Basically they do not trust a usually intelligent and highly skilled worker to arrange his affairs so that all taxes due are paid in full and on time.

Secondly we have once again seen the conflation of avoidance and evasion. Yes you can be against avoidance, but it’s not illegal; quite the opposite, in fact, it has long been sanctioned as an acceptable practice. You want evasion? Fine, so make whatever it is illegal and you’ve got it, but being tax efficient is avoidance, not evasion, and perfectly fine.

And finally, someone can’t actually count. Mr Lester will finish his contract and leave. No pension, no golden handshakes, no extended period on full pay while he finds a new job. That’s quite a chunk of public money saved over a full time employee. In fact, if you do the sums based on the figures that have been published, this tax saving exercise of moving Mr Lester on to the payroll will actually cost several tens of thousands more that if they’d simply left things alone.

But hey, nobody ever accused either HMG or the fourth estate of being financially competent, did they.

And what grates is the underlying point that people who should know better simply fail to recognise that there are freelance contractors among us. People who keep the wheels turning, who make few demands on the state, who represent an efficient and cost-effective workforce. People who are a long way removed from those who create companies for no other reason than to avoid paying taxes on earnings that they wouldn’t have got at all were they not already on the public payroll. You know who you are.

So bring on the witch hunt. But please, break the habits of a lifetime and point it at the right target…

© 2012 All rights reserved. Reproduction in whole or in part without permission is prohibited.

Image: Getting insight by Miran Rijavec

I’m coming rapidly to the end of my current engagement and have been reflecting on what I’ve been doing. Not out of any great sense of sadness or nostalgia but because I have to hand over to the permanent guys that I’ve been covering for while they were off doing more interesting stuff. Which means doing the Great Chinese Examination and writing down everything you know for them to pick up and carry on doing.

Then, while pondering how best to describe one less than dynamic project without embarrassing the Project Manager too badly, it occurred to me that my job is actually pretty varied in one way and very consistent in the other.

Don’t believe all that rubbish about monster pay packets, most contractors actually do it for the chance to work in different places with different people learning different things.

Although, to be fair, the monster pay packets might also have a certain appeal…

Anyway, my usual contract is to parachute into an existing team where I’m either filling the seat of someone off doing something else for a while, or adding some resource because the guys haven’t got enough hours in the day. It’s a case of turn up, get introduced, sometimes in detail, sometime very sketchily (although with my appalling memory for names and faces, it matters not a lot which!), work out the key players, the quick way to get to work and the coffee supply and get on with it. With a bit of luck I’ll also be asked to make things work better or even work completely differently, which is the bit I quite enjoy. But the real challenge is that steep learning curve where you have to fit into the team like you’ve been there for years. Then the real guy comes back and you’re out of a job again. Rinse and repeat.

So as I say, interesting work in a boring sequence. And I wouldn’t have it any other way, to be honest.

But there’s another thing I keep seeing, everywhere I go. Basically I work in and around Service Management, which is the bit that turns the technical wizardry of the data centre into the mundane consistency of the user’s desktop environment. All that stuff that ITIL used to be about before V3 came along and made it incomprehensible and expensive in equal measure. But ITIL has been around for a long time now, and certainly predates the working lives of a lot of the people I work with. So why does nobody know how to use it properly?

Everywhere I go, they have a Service Desk. The usually have a Change Manager. They may have got really enthusiastic and have a CMDB that works. Usually they’re just an asset register with aspirations; the test is to see if it can tell you who will shout if you turn something off. Which is all well and good, if you like your cappuccinos without milk.

Where is the Service Catalogue? I’ve yet to work somewhere that has even a pale shadow of the ITIL ideal. It’s not like it’s all that complex either, the broad brush approach will work perfectly well – email , internet, Office, Security, User Management, assorted approved applications, that kind of thing. Not the tin and wires, that’s for the propeller heads in the back office. The Service Catalogue is the glue that holds it all together, the steamed milk that makes your breakfast coffee sing and stops the cinnamon sinking. Without the Service Catalogue, how do you know what you’re providing, what your Change Manager is changing and what your Service Desk is servicing?

Perhaps I should get out more, but one day in my serial existence I’ll come across a site that uses the basic ITIL structure properly. And that would be really very interesting.

© 2012 All rights reserved. Reproduction in whole or in part without permission is prohibited.

Image: Mobile Edge ScanFast Messenger Bag by Mobile Edge Laptop Cases

Start the year as you mean to go on. Not a bad maxim, of course. Except that I’m starting with the prospect of being out of work at the end of the month. Not, I hasten to add, that I hadn’t seen it coming; the current gig is to fill in for a full time guy who’s been off on a specific project that he has now completed and is returning to business as usual. So no hard feelings. Honest…

Obviously I’m not all that worried; if you want to be a freelance you know that you’re going to finish contracts and you plan for it. There’s money in the corporate war chest so just focus on finding the next exciting opportunity and move on.

Except for an awful lot of contractors, it’s not that easy. These are the ones that don’t understand the risks of IR35 properly, or who have always worked in a world where IR35 is hanging over their heads. Quite rightly they take the low risk option and either declare themselves inside IR35 or work through an umbrella (or, if you’re a real hero, one of the strange offshore things…). That means you take out all, or almost all, your income as taxed earnings and leaves you with no reserves in the company to tide you over. And that is one of the hidden but very real negative impacts of the IR35 legislation; Cameron wants a vibrant, flexible economy but insists on cutting off its base material at the knees.

Then again, I am slightly appalled at the number of contractors who blithely accept they are IR35 caught in the first place, usually quoting conditions that we disposed of years ago. It’s not like there isn’t a huge amount of material out there but too many seem happy to roll over and pay taxes they probably don’t owe in the interests of a quiet life.

Their decision, obviously. But it does irritate.

The other side effect of finishing the gig is that I’ve had to take notice of the recruitment trade again. Never something I enjoy. The first step is to dust off the CV of course. I’ve already seen a couple of roles that I know are within my range and experience so a quick cover letter and attach the latest edition and sit back and wait for the phone to ring.

Which it hasn’t. Bugger…

So back to the CV with a more critical eye. It’s not a bad one in terms of things achieved, though I say so myself, but I re-read it properly and I have to say it needs a bit of work. It’s kept up with the recent contracts I’ve done, but I have been lazy and not re-engineered the whole thing, simply adding on the last contract each time. As a result, it’s all got a bit unfocussed and a couple of years too long. So this weekend it’s back to the drawing board with the electric pencil and re-write the thing to tell the world how good I really am.

Let’s face it; there aren’t that many roles out there at my kind of level that are close enough to home to make them feasible, and there are an awful lot of good people on the market. So the CV has to fill two completely different roles in one document; tick all the boxes that the “recruitment consultant” (for which read ex-sporting goods salesman turned sales researcher) thinks I can do all those funny things that the client absolutely has to have while being literate enough to persuade someone who does know what they’re doing that I know what I’m doing. But hey, I write stuff for a living, ranging from complex technical analyses to fully architected service designs to this blog, so how hard can it be? Well, actually, pretty damned hard. Wish me luck!

© 2012 All rights reserved. Reproduction in whole or in part without permission is prohibited.

Image: Voting Screen – Cartoon by DonkeyHotey

So this is Christmas, and what have we done? Well, speaking personally, quite a lot in one way and another. But it has been a funny old year in some ways.

Last December I was being optimistic about the Coalition making significant changes in various things. I was cautious about IR35, thinking they wouldn’t be a position to repeal it out of hand, but I didn’t expect young Osborne to come out in the Budget with the statement that he needs to keep IR35 to prevent abuses of the system. Which is kind of where we came in.

He did set up the Office of Tax Simplification though, and from there has sprung the IR35 Forum. The former has turned into something of a toothless wonder, getting ever more bogged down in detail. The more cynical among us might be tempted to suggest that this is because a lot of the parties around that table have something of a commercial interest in keeping IR35 exactly where it is, but that would be an unworthy thought. Wouldn’t it….

The IR35 Forum is still to produce anything but it looks like it can at least claim it has a direction and an intent that its parent body is sadly lacking. However we won’t really know much more until the next Budget.

In reality the best we can hope for is that IR35 remains as is, but Hector is rather more competent at judging who to stick under its microscope.

The Agency Workers Regulations arrived and caught all the agencies by surprise – hey, they only had a year’s warning, so what do you expect – leading to a flurry of letters demanding that you declare yourself outside its scope. Tricky, when anyone is potentially inside its scope and we have no case law to work with. Plus can change as they say.

The Cabinet Office was presented with a major paper on Security Clearance following a detailed, wide-ranging research project led by PCG, who highlighted what’s wrong with the system and, perhaps more importantly, what damage is being done. And even some options for how to fix it. This has been very well received and personally I am delighted, having been pressing for this kind of thing to happen for around eight years now.

Several IR35 appeals were completed, all but one of which were found to be outside, so reinforcing the status quo if not setting any new precedents. The other was the one I wrote about just last week, where the guy was found to be outside and then outside, all in the same contract. I think we’ll park that one in the folder marked “Say What?” and just forget about it.

The Market: now that’s interesting. The financial sector suffered an almost universal 10% rate cut during the year, with a few going even further. The rest of the world, however, seems to be plodding along at the same level. Lots of contractor layoffs and enforced holidays as well – again, only in finance. There are nowhere near as many jobs as they were, and rather more people chasing them, but you have to say that, taken as a whole, things aren’t as bad as some were predicting. The job losses seem to have been in the permanent market, so you have to conclude that UK PLC is sticking with easily-disposable temporary resources until they can see the light at the end of the tunnel. A light which is most likely to be a train coming the other way, if the pundits are to be believed.

And best news of all – our favourite MP and failed tax evader, the fragrant Ms Primarolo, is standing down at the next election.

So it’s been a difficult year for many but not a disastrous one, overall. Speaking for myself I’ve been gainfully employed most of the year, and am hopeful of that continuing a while longer. I’m looking forward to a week off eating and drinking far too much – and not having to face a sheet of blank A4 on Thursday night – before having to face the 7:15 from Bristol in the bleak midwinter again.

Have a good one.

© 2011 All rights reserved. Reproduction in whole or in part without permission is prohibited.

Image: new check cover by jelene

One of the great appeals of freelancing your way through life is the constant change, working in new places with new people, solving new problems and generally getting away from the mundane grind of the usual nine-to-five employee world. Well, that’s what they always told me. Perhaps I’m getting old (hell, I am getting old) but I fear I’m beginning to disagree…

As the train pulled out of the station this morning at precisely 07:14, I was reflecting on my journey in. I followed the same old silver Mondeo up the hill out of the village. We were overtaken by the same small white van, doing rather more than the posted 40 mph limit. I just knew at the next set of lights that the red Fiesta in the right turn lane was going to go straight on to get ahead of everyone else in the queue (and screech to a halt 50 yards later at the Pelican crossing…). The flash of brake lights for no obvious reason had to be someone encountering the suicidal loon in the black hoodie cycling along with no lights and no awareness of the world around him (with his luck, he really should be buying lottery tickets…).

Hearing the same announcement every morning at 07:03 about penalty fares. Standing on the platform at a point where you just know the carriage door will be right in front of you and the guy in the over-elaborate winter jacket is going to push in so he can get to the coffee counter on the train before anyone else, not that there’s ever much of a queue to make it even faintly worthwhile doing.

And work, while satisfying and frequently challenging, is basically about bringing a range of systems and services from development into business as usual in a totally consistent way. I have to capture the same information for each system, spot the occasional variation from the standard model and make sure the usual suspects know exactly what to do with the new service when it goes live.

Consistency and repeatable processes. That’s how the world works if you don’t want to waste resources reinventing the wheel every time you need to go somewhere.

But what happens when the world changes?

This is something the agencies are going to have to wake up to, probably sooner than they think. Over the last 20 years they have evolved to the point where most of their process is so consistent you don’t actually need to apply intelligence to it. A lot of the time, you don’t even need people, good pattern matching algorithms will do the drudge work. You keep the good guys chasing the jobs but filling them is all about cranking the handle.

But the market – or the IT contracting market, at least – is changing, and changing very quickly. I’m working for a Managed Service Provider at present who can charge their end client less than £200 a day for programming resources. When you consider the margins they make and the overheads they have to cover, that is eye-wateringly cheap. UK-based contractors simply cannot hope to compete at that level.

The implication is that very soon now the requirement is going to shift to supplying genuine expertise: clients will be looking to the contract market only to bring in people who can add specific skills, in either technical, business or delivery arenas. And our current highly commoditised agency supply chain simply won’t be able to cope any more; they will have to start applying intelligence again. Oh dear…

As Henry Wallace said, the only certainty in life is change. But I say the real trick is to notice change is happening.

© 2011 All rights reserved. Reproduction in whole or in part without permission is prohibited.

Image: Open Source World in KLDP.net by joone4u

I really must think about writing these jottings earlier in the week. I routinely find myself talking about things that have just happened rather than predicting what’s about to happen. Although, of course, that does mean I can be a little more accurate in what I’m saying. Better late than never I suppose…

But this week’s major news in contractor world was PCG’s third National Freelancer Day, which as we all know is held on November 23rd. This is an event that celebrates the role of the freelance worker in today’s economy and is primarily aimed at ensuring the value they bring to the UK is recognised.

The event is going from strength to strength, with ever increasing participation. It was picked up in a wide range of places, including the Twitterverse and a host of freelancer websites. More importantly it not only the mainstream press but we even got a mention from Evan Davies on Radio 4 and a ringing endorsement of the freelance profession from some politician called Dave, who said “This Government recognises the valuable contribution that freelancers make to the economy and, as more and more people choose to join your ranks, you have all our support”. He’ll go far, that lad, you just watch.

So PCG are to be congratulated on a job well done. Again.

Elsewhere though, things are giving off mixed messages. There has been a lot hand-wringing about rate cuts and job losses affecting contractors. Which is quite worrying, with all this fear of double-dips (still think that sounds like an ice cream) until, that is, you look a little more closely.

These cuts are only happening in banking and finance. Other people aren’t seeing cuts in rate – I know I’m not, if a sample of one is useful – and others are actually saying they’ve got a raise in rate. There are plenty of reported contract extensions out there as well. Just not in banking. How odd.

Another point, if you are of a suspicious mind like me, is that all the banks are cutting by the same rate, a precise 10%. Nice round number, of course, but it is just a little odd that they all see the need to make the same cut regardless of how well or how absolutely dreadfully they are faring. One might even think they were working to the same hymn sheet. Surely not: they are, after all, in competition for the best resources and paying a shade more than the competition is one way to secure them.

But hey, these are banks, after all. It’s not like we expect them to understand economics or anything. So it must just be a fluke of timing and cost accountancy.

Ah but, it’s also interesting to note the response of the guys being hit by these cuts. The proportion that react with “That’s it, I’ll go somewhere else” to those whose reaction is “90% of something is better than 100% of nothing so I’m staying” has reversed totally, with the latter group now prevailing. Mostly that’s because the feel there aren’t the jobs out there to be had, which is understandable. And in fact they’re probably right; the vacancies created by the macho “I’m outa here” brigade don’t exist so there is nowhere to go. Rather than a big round robin with the worst performers falling off the bottom, as happened last time around, everyone has stayed on their chairs. And that, if you’re the banks, is actually something of a result; keep the same staff, no retraining needed, and 10% of quite a lot of money to feed into the bonus pot.

OK, so perhaps the banks aren’t all that stupid after all.

© 2011 All rights reserved. Reproduction in whole or in part without permission is prohibited.

Image: Facing My Manga by Rob Boudon

Contractor accountants may be interested in the latest plans to make UK personal taxation more transparent and easier to understand.

David Gauke, the exchequer secretary to the Treasury, last week laid down the Government’s vision for a simpler system.

It’s no secret that a lot of taxpayers find tax confusing and the Government has now said it wants people to be able to understand what they pay. In a discussion paper entitled “Modernising the Administration of the Personal Tax System” the coalition has set out a range of ideas to help people obtain access to information about their personal taxes.

The government wants to hear the opinions of taxpayers, tax professionals and representative bodies on a variety of issues. For example, the consultation asks which areas of the personal taxation system cause the most difficulty and how technology could be used to provide taxpayers with better access to their personal tax records.

As part of its plans to overhaul our tax system, the Government has also published a paper summarising the current state of play with regards to the integration of income and National Insurance. Technical working groups are currently being established to explore the possible options and employers, payroll and tax professionals are being invited to join these groups and provide their opinions.

David Gauke explained that the tax deduction on a payslip is the only way that people know how much tax they pay, but the Government wants to make the whole system more transparent so that people understand their tax rate, the amount they currently pay and how much they should pay.

It was a busy week last week as far as income tax related plans were concerned. The Government also published its draft Real time Information regulations, which it hopes will improve HMRC’s administration of PAYE.

© 2011 All rights reserved. Reproduction in whole or in part without permission is prohibited.

Image: 29/365 – Mattel MONSTER HIGH Series: “Gloom Beach” version Frankie Stein by puuikibeach