My blog for June last year was commenting on the first budget of the new Coalition government. It got a cautious welcome from me – which they no doubt appreciated greatly – and while the overall news wasn’t that wonderful, it at least looked like things were heading in the right direction.

I also mentioned an entry in the Red Book that “was a clear commitment to look hard at IR35. This was backed up by an interview in the Telegraph, where Mark Prisk emphasised the intention to lose IR35 altogether“. On that score for this budget, I have to say close, but no banana.

The Office of Tax Simplification made three suggestions for Mr Osborne; merge PAYE and NICs, either suspend IR35 or greatly improve how it is administered and maybe look at some tests to define who is employed and who is a freelance. Those of us in the “IR35 is the spawn of the devil” camp clearly hoped that suspension would be the result. Sadly, however, it was not to be; IR35 remains in place.

So a bit of a disaster then? Well, no, not really.

Firstly I’m inclined to believe Osborne and Gauke when they say that they could not afford to turn off IR35. Elsewhere in the Budget they confirmed the December 9th announcement regarding the closure of offshore EBTs that are being used to step around paying any taxes at all by many high earners. Without IR35, these guys would simply incorporate and go back to the same old job as a pretend freelance: the classic Friday-to-Monday soft shoe shuffle. With IR35 still there, they can still incorporate if they really want to, but the tax advantage would simply not be worthwhile. Which makes a degree of sense as far as I’m concerned.

Secondly, administration of IR35 is to be improved (I was going to say “greatly improved”, but it could hardly get any worse!). In other words, stop spending tens of thousands on five-year cases that invariably lose and focus instead on the ones where there may be a genuine case to answer – which, on current numbers, is about 3% of them. HMRC aren’t doing this by themselves, they will be talking to the experts on contracting who will be very clear that the net will be focused and not widened. HMG have invited PCG to be a key player in this, and for one I’m reasonably certain PCG won’t let anything through HMRC’s clutches that makes things worse for the genuine freelance.

Finally Osborne is now looking to merge PAYE and NICs. As I said last week this is a very difficult thing to achieve, but at least we have a chancellor willing to take it on. That means that if this can be made to happen, IR35 ceases to have any purpose anyway

The rest of the budget was, I thought, probably about as good as it could be given the starting position. OK, so Osborne has done a smoke and mirrors job by changing how inflation is measured and people who understand the Oil and Gas industry far better than I do are seriously dischuffed about the raid on their profits to fund the fuel equaliser, but the intent is sound.

So not the result we hoped for, nor even the result we would have quite liked, but at least we are still in there and having a direct say on how we are to be taxed. This is, despite the cries of outrage from the hard of thinking, no small achievement. PCG and Chairman Chris Bryce have done a seriously significant piece of work via the OTS and should be praised for it.

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Image: The Small Hand that Kills (41th/52) by skippyjon

Now the dust has settled on the OTS report, it’s been fascinating to see the various reactions to it. Most interestingly, nobody seems to have focused on the biggest potential recommendation, that IR35 be suspended with immediate effect. Which is a shame, really.

Most of the discussion obviously centres on the main recommendation, that PAYE and NICs get merged into a single tax. As I said last week, this is a far from trivial exercise, although the ultimate benefits in terms of simplicity and consistency would be enormous. Even if Mr Osborne does take this on, as many commentators seem to think he will, it will be years before it is achieved. More importantly, if the focus stays on the anomalies that are bound to arise during the transition, such as pensioners who don’t pay NICs in the first place, rather than on the real benefits then it will go nowhere. So let’s hope that just for once the commentators and pressure groups keep their eye on the real prize and, just for once, look at the long term picture.

So assuming Osborne does bite the bullet and make a bid for being a seriously reforming Chancellor (as opposed to one who simply wants to cut everything, which is how the opposition want to portray him and which really is a load of Balls), then what is the next OTS recommendation?

That’s right – stop IR35. Whoo hoo…

Needless to say, even doing that is not that simple. What happens to the cases currently being investigated? Are they simply stopped, leaving the worker hanging without a decision in case it is later reinstated, as may happen? Are they abandoned altogether, which seems a little unlikely? Or will they be allowed to continue to a conclusion, which is my guess since legal processes are fairly much unstoppable once invoked. About the only certainty is that nobody else would have a simple PAYE audit mutate into a five year, £50,000 court case.

Take out IR35 and would we then see a rush of incorporations as all those who say they use umbrellas because they can’t be bothered with the administrative overhead of their own company suddenly realise it isn’t actually that much of a problem and the extra income would really come in handy. That wouldn’t do the umbrella companies a lot of good either, especially with the Agency Workers Directive kicking off later this year.

In fact the only people to remain comparatively unaffected by it all are those like me who have their own companies, understand the rules who are trying to work as a business and always have done.

The “In Business” tests didn’t get a lot of attention, possibly because the OTS doesn’t really see adding an extra layer of administration as a simplification, even if it would greatly limit the number of cases HMRC would have to worry about.

And the third option, that HMRC’s administration of IR35 be greatly improved, was described by PCG as “risible”. Not because the idea of HMRC doing anything even vaguely resembling effective administration is seen as something of a forlorn hope (which it is, of course), but until HMRC are subject to a formal duty of care and subject to a full cost benefit analysis of the cases they bring, there is nothing to stop them pressing cases that they have little or no hope of winning, just because they can. They demand we do everything 100% correctly and attack us for the merest slip, but are totally exempt from any such constraint themselves.

We have to wait until the Budget to see what is going to happen of course, but PCG are to be congratulated for driving us to the position we now find ourselves in, that not only HMG are recognising that IR35 is an abomination in the eyes of the Lord, but that they may actually do something about it.

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Big news of the day is the release of the Office for Tax Simplification’s report on Small Business Taxation. Well, big news for freelance contractors anyway. This is because this is the report that lays out what they think should happen to IR35. And it’s received a resoundingly cautious welcome from people like the PCG.

So not all good news then?

The main recommendation is that HMG bites the bullet and merges PAYE and NICs into a single tax. This is something that’s been around for a while – the Mirrlees report said exactly the same thing last year, as did a Treasury consultation from 2007. Except we didn’t really have a functional government back then and it went in the “Too difficult” box.

However merging the two has a lot of useful side effects, such as eliminating the advantage of payment through dividends, which among other things would make IR35 completely unnecessary. Which has to be a good thing in anybody’s book.

The snag is this will take years to bring into effect and the more you look at what’s involved the more complicated it gets. For example, the tax system recognises the difference between earned income and risk-based investment income and taxes them separately so as to encourage entrepreneurialism. Pensioners don’t pay NICs, so would need their own separate tax treatment. And so on – getting from here to there is a complicated and politically dangerous road.

But the report goes on to say that if that basic principle is adopted, then IR35 should be suspended with immediate effect. This suspension would allow HMRC to focus on other, frankly rather more important areas of tax gathering – you know, the ones that actually return more than they cost to collect – as well as showing what would happen to tax revenues if IR35 was simply abolished outright. So, for example, all those people who work through umbrella companies out of fear of IR35 may well incorporate and get the benefits of being a real contractor. There may be a rush of companies pushing their employees into turning freelance, which is what IR35 was supposed to prevent (it didn’t, as it happens, but let’s not go into that right now). There’s also a whole industry built on the existence of IR35 that would go into a sharp decline. So lot’s of potential issues to be resolved.

To be fair the report also suggests two other options; firstly that IR35 remains and HMRC are far more sensible, responsible and systematic in the pursuit of its enforcement (which caused me some hilarity and probably wins this weeks Littlejohn prize for “You couldn’t make it up”) or secondly the adoption of a series of tests that put you outside the scope of the IR35 legislation, clearly and simply.

So why a “cautious welcome” from the PG, who have been pushing for the abolition of IR35 for a long time? They are totally in favour of the suspension of IR35 as a step towards its removal but suspensions can be reversed, so it’s not the 100% solution they were hoping for. They also support the idea of the “in business” tests (as does the IoD, come to that), but are not exactly in favour of the “HMRC taking more care option” – to quote them, “This is widely regarded as risible”. And of course, it is all dependent on Mr Osborne taking note of and accepting the main recommendation for merger.

Still, it is a huge step forward and PCG deserve all credit for their work in getting us to this point. The war is not yet won, but we have perhaps now won the El Alamein battle for the abolition of IR35.

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It seems there has been a major step forward in the battle to bring a little sanity to the importing of non-EU workers under the Intra Company Transfer visa rules. This has long been a bone of contention, most notably in the IT contractor market, but also in some other areas such as engineering. Today’s change in the rules marks a step change that should benefit UK PLC

Firstly let’s be very clear that there is nothing wrong with the concept of ICTs. Given the multinational nature of many big companies these days, it would be foolish to put artificial barriers in the way of being able to move key staff around to where they are needed. And listening to the screams of protest from some corners – most notably, that of St Vince of Cable who, you might think, ought to know better – limiting ICTs will only spell doom and disaster for the UK economy.

Or will it?

Well, no, to be honest. If you look at the numbers carefully, it is clear that there is a baseline of ICTs that has remained pretty much constant for some time. This, we can assume, represents the number of key people that are moving in and out for good reason. However, the overall number of ICTs has been growing, and growing at an increasing rate, for some time. This coincides very closely with the increasing use of off-shoring work to save money. That is something that started in the mid 80s but which has been steadily accelerating ever since and is now something of an epidemic. But, and it’s a big but, in recent years the growth exceeds the amount of work to be done; especially in a time of recession and business slowdown. Which puts good people out of work.

OK, so businesses need to optimise their bottom line, and going to the cheapest supplier is a way to do it. Provided, of course, the quality is comparable which, to be blunt, it quite often isn’t.

But where it’s really gone wrong is in the use of ICTs. These are meant to be used to bring in specialists for short term purposes. With the greatest will in the world, a specialist is not someone you would expect to be taken into a training regime to learn how to do the job they are supposed to be a specialist in. And that is what has been happening. ICT visas have been used to bring in technical staff that, while technically qualified, can’t do the job. They are here to learn how to do it and then take their new skills back home. The only reason that can work, economically, is if the cost of transport, accommodation and salary is low enough to produce a viable profit. Which it is, but only if the wages in question are really low; on a par, for the sake of an example, with what a well qualified coder will get in, say, Mumbai.

So what has changed then?

Basically, HMG has responded to a long and hard fought campaign by the likes of the PCG that tried to demonstrate that ICTs were being abused in order to keep the economies of importing staff viable. As a result they’ve made a very simple change: if your ICT is for a year or less, you must be paid £24,000, if it’s any longer, you must be paid £40,000. Which are still a bit less than the going market rate for the skills in question, but a lot more than what has been the norm. And, of course, totally irrelevant if you are bringing in an established, skilled employee who will no doubt already be on a market rate salary.

It’s early days to see what impact this will have: there are several ways the new rules can be neutralised. Indeed, one of the issues in proving abuse of ICTs exists has been the total lack of any documentary proof about how much people were being paid in salary and expenses and there’s no reason to believe the suppliers will willingly give up a very lucrative market. But it is a big step in the right direction.

PCG – and one or two very dedicated individuals – are to be congratulated for achieving a major success. Not least by the several thousand UK-based contractors whose jobs are now an awful lot safer.

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Freelancers should take note that HMRC is stressing the importance of filing online tax returns by the deadline date of the 31st January. Failure to comply with this will result in a penalty of £100.

The Revenue has advised people who are struggling to sort out their affairs to seek the advice of a specialist contractor accountant, tax adviser or contact the department for assistance.

All outstanding tax returns for the 2009 – 10 financial year must be filed by midnight on the 31st of January, a Revenue spokesman explained. People who have not used online filing before are also reminded that they need to leave plenty of time to complete the registration process.

Once you register online you receive a User ID and an Activation Code will be sent by mail within 7 working days. It will therefore be necessary to register no later than the 21st of January to make sure the Activation Code is received on time.

Leonie Kerswill, a tax partner at PwC, said that people tend to push their tax return down the priority list during the festive season but after over spending at Christmas it would be unwise to incur the £100 late-filing fine. She also reminded taxpayers that they need to pay the tax due on January 31st as well as filing the form.

Meanwhile, the PCG is organising a tax planning event in Manchester on February 2nd. The event will take place at the Mint Hotel and will deal with the importance of tax returns and record keeping as well as the changing IR35 landscape.

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Image: I have a burning hot love letter 4 U by Nina Matthews Photography(away all of Jan)

And, I have to say, quite a successful one, perhaps unexpectedly given where we started from. Speaking strictly as a freelance contractor of course, I thought it appropriate to round off 2010 with my slightly biased view of how the year has gone. So here goes with a very personal summary of the key events.

The main one, of course, has to be the replacement of Gordon the Glum with a real person. You may not like CallMeDave but you have to agree he’s an improvement on his predecessor: OK, not if you’re Ed Balls or Piers Morgan of course, but who listens to them anyway…?

We’ve gone from a Government that was totally and utterly convinced they knew best how to spend your money to one who was perfectly happy to let you spend it how you wanted. Of course, there wasn’t all that much to spend and they were going to have to hang on to even more of it than before. But let’s not be picky; at least we know why they’re being so mean.

So let’s look at the good things…

ICTs and the abuse thereof. Something I may have mentioned once or twice before? Leaving aside the wider question of uncontrolled immigration, there is a clear intent by HMG to cut down the number of workers coming in to the country to undercut the local workforce. Of course we are never going to stop companies using the cheapest labour they can find, that’s all part of capitalism and globalisation, but at least someone is trying to make it a bit harder to get us to train them how to do take our jobs away and kill off the industry at its source. Which, ultimately, has to be a good thing?

We still labour (geddit, geddit…?) under the Damoclean threat of IR35 of course. I never shared the conviction of some that a Tory government – oops, sorry, a Coalition led by the Tories – would instantly delete IR35 from the statute book. That was never going to happen; there is a political justification for IR35 that, while utterly barking, is not going to be reversed in any meaningful way.

Obviously the establishment of the OTS, and its very clear directive to look at IR35 as a priority was highly welcome. Even more welcome was the PCG gaining an influential seat on the Consultative Committee of the OTS looking at small business taxation. An organisation with 20,000 members and a 10 year lifespan gaining such access and respect at that level is something that simply cannot be underestimated. The OTS is working to some impossible deadlines, but fingers crossed, progress is being made.

The job market certainly seems to be picking up. I’m seeing hugely more jobs in my scope that I saw this time last year. Of course, 95% of them I won’t bother going for because the hirers are demanding impossibly tight lists of skills, industry knowledge and qualifications. The agencies are still incapable of challenging them and offering alternatives. For example I’ve been tracking a discussion on LinkedIn about how to use shared services and/or outsourcing to save money in Local Government. Good idea and one that may well work. Sadly, the consensus is that it won’t happen because the hirers put Local Government knowledge well ahead of any business experience that means you might actually understand how to do it properly. You see the same thing in Finance, which is a real shame since that’s where the work is. And don’t get me started on Security Clearance.

Oh, and I nearly forgot. St Vince of Cable has shown himself to be every bit as incisive, astute and intellectually superior as I always thought he was…

Personally it’s not been a bad year. I’ve worked most of it and actually banked a profit, which is nice. There is certainly reason to be optimistic about next year. The PCG continue to make great strides forward which is a source of pride, even from my marginal input to that progress. And I’ve had some nice comments about this blog, which proves that at least people are reading it, even if they don’t agree with me.

So roll on 2011. I think it could be an interesting year. I’ll see you there…

Alan Watts can found at LinkedIn.
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Image: 20101022-IMG_9603 by Dhammika Heenpella

You may recall I wrote last week about there being an apparent majority of recruitment consultants who don’t actually know what they’re doing, much less understand what (or rather who) it is they’re selling, Sadly that also seems to be true of contractors themselves.

Now obviously I don’t mean the things they know about their chosen field; if you aren’t pretty damned good at what you do you won’t last long as a freelance after all. Clients hire freelances to add instant value and high levels of expertise at the drop of a hat (or a well-written contract, anyway) and I’ve met very few indeed who don’t deliver exactly that.

No, I’m talking about the other side of the freelance business, running the business itself.

Perhaps I’m biased since I’ve been doing this for quite a while now, but I am continually surprised at the kinds of questions you keep being asked. It’s not like the information isn’t out there. If you can’t face trawling through the HMRC labyrinth to find things – which is something I try to avoid as much as possible – there are many very good and authoritative guides on the web, not least the PCG’s Guide to Freelancing. So why don’t people read them?

For example, in the last week I’ve seen examples of all five of the obligatory dumb questions…

The “My accountant can’t count” question. Someone who has painstakingly worked out his taxes and thinks he should be getting more than his accountant says he should. Usually they’ve either forgotten something trivial, like Employer NICs, or they’ve got the basic arithmetic wrong. That’s why you use accountants, so why try and double guess them?

The “Why is my accountant so expensive” question. These are the guys who begrudge paying a tiny percentage of their gross for a professional service. Try as you might, you will never persuade them that if an accountant actually costs you money, get a new one. He’s there to make sure you get the best return on your gross after all. Unless you tell him to do something totally silly of course.

The “How can I get to keep 95% of my gross” question. Limited to those who have either fallen for the sales blurb or don’t actually think living and working in the UK means you have to pay UK taxes (aka “Doing a Green”…)

The “A contract is just a piece of paper” question. The guy who’s signed up to a contract but then discovers he hasn’t got a notice period (which is a good thing, by the way, not that they’ll believe you about that) or has to carry PI insurance or something else he doesn’t like. Followed by plaintive cries of “What if I simply don’t bother, will the agency put a hit man on to me”. If it’s in the contract and you signed it, it’s legally binding; why is that so hard to understand? Try reading and negotiating before you sign it next time

And finally the “What expenses can I claim” question. Comes in many forms this one. Why can’t I claim travel after 24 months (you can, it’s just that it’s taxable). Can I have a 52” plasma screen monitor for my laptop (sadly it’s too big for the study, I’ll just have to keep it in the living room). And so on..

And why does this suddenly matter? Blame IR35, as usual.

If, as seems increasingly likely, whatever replaces it is based on proving you’re in business – just like Dim Prawn always said was the case (and then promptly forgot about saying it) – then understanding the rules of business would seem to be a pretty good starter for ten.

Which means, sadly, having to ask questions…

Alan Watts can found at LinkedIn.
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Image: The Questioning Roboto by matt.hutchinson

A recent report on ITV’s Meridian Tonight has given an interesting insight into how freelancers and contractors are thriving in the traditional new media hotspot of Brighton & Hove.

At present, 16% of the city’s workforce is self-employed – twice the national average – and the numbers are increasing in the location, which has become a hub for new media start-ups.

Darren Fell, MD of Brighton-based contractor accountant‘s Crunch.co.uk has experienced first hand the surge in freelancer and contractors.

He told ITV: “It is flourishing out there, and people are saying ‘no’ to the corporates, ‘no’ to ordinary work and ‘yes’ to freelancing.”

Crunch.co.uk has outgrown its current surroundings and is set to move into new offices as the business expands to cater for the ever-growing freelance workforce.

The regional ITV programme was screened to mark the second National Freelancers Day which has been more successful in gaining wider recognition than the inaugural event last year. Even Prime Minister David Cameron has leapt atop the bandwagon with a letter to the Professional Contractors Group (PCG) outlining his appreciation of the crucial role that freelancers and contractors play in the UK economy.

The freelance workforce is already thriving on the south coast, but with supportive governmental policies (particularly in regards to IR35 which is currently under review), Brighton may just prove a microcosm of what’s in store for the UK as a whole.

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Image: Hey! Look! Everything is Good by RubensLP

That was the immediate reaction to Theresa May’s pronouncement on how the Coalition will be handling work visas as part of its attempts to reduce immigration: a fair start but not nearly limiting enough. While it was good to see positive efforts to reduce the influx of non-EU workers, there was a sense of disappointment that the ICT visas, about which there has been so much debate, would not be included in the capped total.

Why this should be so is mostly down to two factors. Firstly the somewhat misguided belief of some Coalition members, apparently led by St Vince of Cable, that British business would flounder in a sea of amateurishness if we didn’t keep importing these vital skills from overseas in unlimited numbers. Well I’m sorry, St Vince, but I’ve worked with quite a few of these incoming experts and while the odd one or two are very good indeed, the average is rather closer to the other definition of “expert”; “ex” as in “has been” and “spurt” as in “drip under pressure”.

Joking aside (OK, it wasn’t much of a joke, I admit…), it is nevertheless a valid point. ICTs are for moving highly skilled experts around or for putting experts and trainees together. It seems a little perverse that the bulk of the ICT traffic seems to be bringing in the trainees rather than exporting the trainers.

The second pressure was from big business. Some very big businesses in fact, although oddly enough they aren’t primarily UK companies. UK businesses were involved of course, although reading between the lines a little it is horribly evident that the UK companies had a genuine fear that they would lose their ability to move modest numbers of staff freely in and out of Britain while the other guys, the predominantly non-UK ones, were clearly more worried about their bottom line. Although you have to ask exactly why non-UK companies think they should be able to redirect UK’s government policy in the first place.

Anyway, the deal has been struck, ICTs are not being capped. Gloom and despondency among the UK freelance workforce, joy unbounded from UK PLC (or should that be Elsewhere PLC?).

But wait. There is a glimmer in the gloom.

If you want an ICT visa and to be here more than a year, you have to be earning at least £40k per annum in real salary. Given the supposed qualities of the average ICT that is a not unreasonable figure for most companies.

Aim to stay less than a year and it falls to £25k. Which is a laughably low for a talented individual, of course, but still significant; many ICTs being body-shopped in the UK workforce are allegedly paid rather less than that already. But that one year cap makes all the difference. It blows a big hole in the budgeting, which has been designed to recover immigration expenses over two or three years.

The reactions to this from the big boys have been interesting. Briefly, they really do not like it. Which means basically we got it right. Shame…

And one quote is, I think, particularly revealing. One company is reported as saying that it will be difficult to pay different salaries to people depending on if they are staying more or less than a year. Well it shouldn’t anyway (perhaps they need a better IT system…), but surely you are paying these people a wage in their home location, aren’t you? Why do you want to pay them anything different for a temporary gig elsewhere?

So while at first glance it was less than we wanted, it’s actually a pretty damned good compromise. The guys who put this together were largely reacting to some solid, very high quality work by the PCG team who should be congratulated for a job very well done. That an organisation representing some 20,000 freelance members can persuade the Coalition to go against the wishes some multti-billion pound corporates is an astonishing achievement.

In fact the title of this blog is all wrong. It should have been “Nemo me impune lacessit”. Which, as I’m sure you all know, translates as “Don’t mess with me, Jimmy”.

Alan Watts can found at LinkedIn.
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I know I keep banging on about ICT abuse, but I make no apologies for it. The systematic destruction of one of the few things we do well in the pursuit of short-term gain is getting well beyond a joke. Just look at what’s been reported in the last week or so.

Firstly, it seems that British business is in dire straits, utterly unable to get the skilled staff it needs to fill some key roles. Therefore, we mustn’t put any kind of cap on intra-company transfers or we will go even more bankrupt than we already are.

OK, so explain this. While most companies need a hundred or so ICTs a year to bring in their key personnel, how come just five of them consume over 10,000 a year? If these highly skilled employees are so necessary, why are the people already doing the job being tasked with teaching the newcomers how to do it? Isn’t the point of an ICT that the holder knows what they’re doing already?

Also why, may I ask, if one of the key tests for granting an ICT is that the imported worker should not displace an established worker, why are increasing numbers of established workers being displaced as soon as possible?

Or if we really can’t supply the skilled staff we need out of the thousands of out of work contractors and the 17,000 IT graduates who can’t get work, just why aren’t UK companies training the people they need from their existing workforce?

Then I read of someone whose freelance colleagues have been told they have to become employees of the agency – not, you notice, the client – at a set maximum salary. Needless to say, they have universally decided that’s not how they want to live their lives and are leaving as their contracts run out. So now they’ve been asked to stay on long enough for their replacements to get their visas processed and receive training and mentoring on how to do the job of the departing freelance.

Kafkaesque, isn’t it?

There are faint glimmers of hope. For example, the suggestion is that you have to pay an ICT at least £40,000 a year – and that’s meant to be a genuine salary, not £20,000 plus subsidised accommodation, flights, and other ethereal additions to make the numbers look good. Although that’s been offset by the threat not to include ICTs in the immigration cap. After all, they’re not going to swap the ICT for a Tier 1 after a while and stay here, are they? Oh, hang on a minute…

The Coalition have been researching and consulting very hard on this whole subject. They have been lobbied by groups such as the PCG who feel they would rather like to hang on to their market, and by others who business model seems to be based on taking that market and moving it elsewhere. I think the policy will make interesting reading. I don’t think, however, that I’m going to like it very much.

Never has that old Chinese curse seemed so totally apt…

Alan Watts can found at LinkedIn.
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Image: Say No to new Japanese Immigration Procedures! by stbeck

Earlier this week, the Office of Tax Simplification published a comprehensive list of all the UK tax reliefs and allowances that are available; 1042 of them!

How many contractor accountants can name all of them?

The OTS is now asking people to let them know if they have missed any off the list and invited the public to leave comments on its website if they take advantage of any of the allowances.

John Whiting, the OTS’ tax director, said he expected some people to be surprised at the number of reliefs in our current tax system. In fact, he had only expected to find a couple of hundred. Some of these allowances have a clear, valuable benefit and we do not want to change those. However, others may not be used any longer or be too complex and onerous to be of any great use, and it is those that the team wants to focus on.

Of course this long list is going to contain some odd sounding allowances such as ‘angostura bitters relief’, and this sort of relief will also be closely scrutinised.

The OTS has set criteria for abolition of an allowance and these will take into consideration the cost of administering the relief and the complexity of the legislation.

The OTS has also set up two consultative committees to take on board input from SMEs and their advisers. The small business tax review committee includes the chairman of the PCG, Chris Bryce, and Anita Monteith from the ICAEW.

In separate news, HMRC published its business plan on Monday which lays down its intention to implement real-time information for the PAYE system by April 2014.

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Do you ever get the feeling you don’t really understand what’s going on? Reading the news over the last week, I kept getting this horrible feeling that I was in an episode of Reggie Perrin.

Perhaps I’m working too hard, but if we’re trying to save as much money from the public purse as we can, why are we promising to give everyone the maximum pension possible? Why is the Mayor of London up in arms about ethnic cleansing in Streatham? And why will I have to take money out of my company to provide a pension fund for my staff – of whom there is precisely one – when the money that I deliberately leave in the company is meant to be to help fund my pension…?

The world really has gone slightly mad.

There have been flashes of sanity though. The Institute of Directors has written to the new Office of Tax Simplification pointing out that there is a tax measure they really need to look at. One that causes great confusion, that is counter-productive and actually costs money to implement since almost all attempts to charge it result in failure. You might have heard of it; it’s called IR35…

Errm, hullo, IOD? Aren’t you about 10 years late? Some of us – about 20,000 to be precise – have been beating that drum for quite a long time. Now, finally, it’s on the agenda for reassessment and, dare we hope, possible abolition, and the IOD have realised it’s a bad thing. Keep up at the back, chaps.

Actually what I thought was quite amusing was that they used the same arguments and most of the same statistics that PCG have been generating over the years. So perhaps there was a grain of truth in what we’ve been saying all along.

We’ve also been saying things about abuse of the visa system and the importing of non-EU workers to undercut the local variety, many of whom are now out of work. So it was with a degree of amusement that I read a survey has shown that a quarter of Tier 1 visa holders are working in non-skilled jobs.

Say what? Tier 1 are the people who can stand on their own two feet, who will make a positive contribution to the country and who, after two years, are supposed to be earning at least £35k a year to keep the visa. Granted people can work for whoever they want, at whatever they want, but if being a supermarket cashier is the height of your ambition, you really do have to wonder why they came in the first place.

I also read that someone in government has had a bit of an inspiration. When discussing the proposed cap on immigration and its reputedly monstrous impact on some companies’ ability to bring in staff, it was suggested that perhaps using up the ones they had applied for might be a way out of their dilemma.

And I’m sorry, but I still refuse to take St Vincent of Cable seriously.

Still, some things brought a smile to these grumpy old lips. The better than expected growth figures and the retention of our AAA rating prove that some think we’re going about things the right way. The Coalition’s spending review contained a lot of solid common sense, something politics has been lacking for quite a while (about 13 years, to be precise) although I still don’t quite get that thing about non-aircraft carriers. And I loved Osborne’s parting shot when announcing the programme, that the total cuts added up to 19% of government spending, which is precisely one percent less than the 20% that Labour had said was the most we could afford and what they would have done had they been in power.

So a confusing week in some ways, but not a bad one, all things considered.

Alan Watts can found at LinkedIn.
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