Tag Archive | "coalition government"

What now for contractor accountants in depressed areas?

Vince Cable confirmed this week that 24 local enterprise partnerships have been given the go-ahead, a move welcomed by the Federation of Small Businesses.

Whilst the FPB is pleased by the announcement, it has called on the LEPs to make sure SMEs are put at the heart of local communities. The policy chairman at the FSB, Mike Cherry, said the Federation has always encouraged local businesses and local authorities to work in partnership and therefore the setting up of these LEPs is a logical step.

Cherry believes that small businesses must have a genuine involvement in decision making and business activity if the partnerships are going to be successful. LEPs will not work if civic leaders simply pay lip service to the SME sector, he added.

The Regional Growth Fund, which is designed to support private sector job creation in areas that currently depend on the public sector, was also declared open for business this week. The fund has a pot of £1.4bn and Vince Cable said he was delighted to see so many imaginative proposals to help drive economic growth in local communities.

David Frost from the BCC thinks these moves are a good start but explained that LEPs must concentrate on getting the basics right in order to give businesses greater confidence to invest and create new jobs.

However, not everybody is confident that the new initiatives will be successful. Mark Prisk, the business minister, believes that many LEPs lack focus and will fail to help economic growth. In a leaked letter to Vince Cable, Prisk said that the business community felt many LEPs do not have the ambition necessary to make an economic impact.

Shadow business secretary, John Denham, is also critical of the government’s plans saying that almost 800,000 businesses have been excluded. 60 local partnerships applied to become LEPs and because only 24 have been approved in the first wave, 21 million people will not be covered. Denham said the plan for growth is a shambles and leaves massive areas with no organisation to support economic development. He thinks that this proves the coalition has given up on growth.

More than 75% of inhabitants in the North-west and Yorkshire and Humberside will be covered by an LEP whilst only 26% of people in already depressed areas like the North-east will be in an LEP area.

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Coalition government will be on the lookout for tax evaders

Danny Alexander likened tax evaders to benefit cheats when he unveiled the government’s new plans to crackdown on fraud and tax avoidance.

The Treasury chief secretary told the Lib Dem party conference that some people think it is socially acceptable not to pay their fair share of tax, whereas in reality it is morally indefensible.

He went on to say that the coalition will be ruthless with businesses, contractor accountants and individuals who believe paying tax is an optional extra. To help catch tax evasion offenders, the government plans to make £900m available to HMRC, a measure which could see £7bn a year in lost taxes recovered by 2015.

Some of the money will be spent on setting up a dedicated team of investigators who will focus on online tax evasion as well as offshore tax havens. The hope is that this team will increase the number of prosecutions against tax evaders five-fold. HMRC will also be able to utilise the services of private debt collectors in order to recoup outstanding taxes.

John Whiting from the CIoT said that tax advisers will welcome the news. By cheating HMRC, offenders are robbing the government of the money it needs to fund public services and that has the knock-on effect of making everybody suffer.

However, not everyone is convinced by the new plans. Richard Murphy from Tax Research UK says that the problem is systemic and therefore it can only be tackled by systemic reform.

Robert Gaines-Cooper, the British born entrepreneur who fought a long running battle with the Revenue over his tax residence status, said that the government thinks of the words avoidance and evasion as meaning the same thing. He says that avoiding taxes is OK as long as it’s done legally, whereas evasion is definitely illegal.

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The job curiosity shop

August is traditionally a time when the Job Market goes into limbo. People are away on holiday, trade generally winds down, France stops completely and people are generally more relaxed than usual. Thing is, though, that this August is doing some strange things.

For a start, Public Sector work seems to have vanished entirely. This is not exactly unexpected, of course, given the Coalition’s policies in this area, but it’s been so abrupt you have to ask yourself if the powers that be have really thought it through. For example I was up for one process rationalisation role recently that, with a following wind, would have probably resulted in a cost saving considerably larger than what I would have charged them for doing it. The role got canned, sadly, since they can’t recruit anyone – even non-permanent people like me – on account of HMG’s directives. This means that they will actually now be spending money over the next six months that they don’t need to spend because they are not allowed to spend any money. Not my understanding of economics, but there you go.

However look at the wonderful world of Finance and the stream of new roles is never ending. This doesn’t help me find work, of course, because these roles will naturally only ever go to people who already work in the Finance industries, even roles in my arena, Service Management, which is largely unconcerned with the nature of the industry. In effect they are operating the same apartheid as all those Government hirers with their slavish adherence to the wrong set of rules for Security Clearance.

Then you see roles that are mostly managerial in nature, running portfolios of projects for instance, that still demand a list of technical skills. OK, you need to understand what your techies are doing, and you also need to be able to explain it to the wider business. So while I can’t configure a high availability Storage Area Network, I do know what one is and how it works. Clearly, that’s not enough; I have to be able to build it from the ground up. I thought that what was we paid the techies to do though…

And of course the agents don’t help. I didn’t get a call about a role last week because “the rate is too low to interest you”. Sorry? For one thing the job is literally 20 minutes from home; that’s worth quite a few pounds a day all by itself. Plus the rate on offer wasn’t all that awful and it was rather more than I’m earning right now.

Or there’s the other agent that actually put me forward for a fairly senior and challenging piece of work (actually one would I would really relish doing) then goes on holiday for two weeks. OK, people can have holidays, but is it too much to ask that someone else in the office at least knows the role exists? So much for managing the client’s expectations then. Or mine, come to that.

So as I say it’s all the usual frustrations and the usual clumsiness of the middle men. This is why I say you can’t really call it a Job Market any more. It’s really is more of a Curiosity Shop.

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Online accountants should prove their qualifications

UK200 wants the government and accountancy industry bodies to do more to highlight the differences between qualified and unqualified accountants.

Anybody can set themselves up as an accountant and a lot of clients don’t appreciate that firms who are not regulated are offering substandard advice, albeit at a cheaper price than a regulated practice.

The MD of a firm of accountants in Chesterfield pointed out that at first glance there seems to be very little difference between a qualified or unqualified accountant. However, there are some things that an unqualified accountant cannot do.

Software packages now make it easier for limited company contractors to do their own accounts and coupled with the coalition’s proposals to reduce red tape, unqualified accountants could start to find life even easier.

The UK200 Group wants the ICAEW and the ACCA to promote the brand so that people won’t use an unregulated accountant. They would also like to see the government take action to regulate or close down operators who are unqualified.

The vice-president of UK200, Jonathan Russell said that some small accountancy firms are seriously thinking about whether the burden of regulation is now too onerous to bother with. Russell thinks that there are three possible options going forward. Either regulation has to be compulsory for all accountants, or accountants who are not qualified are barred from practising, or the regulation on those who are qualified is reduced so that they can compete on a level playing field.

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More business funding is needed, but where can we get it?

Vince Cable, the business secretary, says that banks are making it harder for small firms to apply for loans despite claims from the semi-nationalised banks that they approve at least 80% of loan applications.

Stephen Pegge, the chairman of the small business panel at the British Bankers’ Association, claims other business bank accounts are also matching this rate.

Mr Cable said these claims are misleading and cited proof from business industry bodies such as the Institute of Directors that shows that the banks are not meeting demand.

The IoD recently published research which found that around 33% of UK businesses had been refused banks loans. However, there has been some improvement as similar research conducted last year found that 57% of businesses were refused finance.

The BBA has also released figures showing that net lending by the banks was at an all time low in May. £500m was lent to SMEs but the banks collected more than that in repaid debts and withdrawn overdrafts.

A consultation is to be launched this week to discuss business finance and it will consider whether there would be any benefit to be gained by forcing new targets on the two semi-nationalised banks; RBS and Lloyds. Cable thinks that mandatory action forcing the two banks to make more finance available could be an attractive option.

However, the Labour government was unable to force Lloyds and RBS to meet lending targets to limited company contractors even though they were legally binding and a spokesman from the Treasury said that the coalition was still considering whether a new target based option would be effective.

The consultation will also look at other business financing alternatives. The coalition has already said that using equity finance could be one possible option. Currently only between 1 and 2% of SMEs use this option and the financial secretary to the Treasury, Mark Hoban, says that the majority of small businesses are missing an opportunity. To encourage more freelancers and SMEs to take up the option, Vince Cable also suggested recreating 3i, a private equity organisation which provided equity for small, expanding businesses.

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What now for IR35?

Contractor accountants can pass on this welcome news for freelancers and sole traders from Mark Prisk, the small business minister. In a recent interview he said that the comprehensive review the coalition is going to undertake of business taxation will seek to replace IR35 with a long-term alternative.

The rules surrounding IR35 are continually changing and the new government wants to put in place a lasting settlement. The chairman of the PCG, Chris Bryce, is delighted by the news. Although there is still a lot of work to be done in order to find a fair settlement, he is optimistic that his organisation can work together with the government to achieve this.

George Osborne’s budget speech only contained one mention of IR35 when he confirmed that the tax would be reviewed, along with the small business tax, and that the government would release more details soon. It is expected that the review will be launched in the summer.

The coalition has committed to simplifying the British taxation system. They want to implement measures that prevent tax avoidance whilst at the same time ensuring that the self-employed do not face undue administrative burdens.

There are currently around 1.4 million freelancers in the UK who are governed by IR35.

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Bad News, Good News?

So where was I…? Back refreshed from two weeks of idleness in the sun, and already looking for the next contract. Don’t seem to have missed anything too serious while I was away.

I managed to get back just in time for the Coalition’s first Budget. I watched it live – oh the joys of being on the bench – and for the first time in 13 years I didn’t have an overwhelming urge to throw something heavy at the TV. What a pleasure it was to listen to someone who sounded like they both knew what was going on and was willing to be honest about it.

Of course, the underlying message isn’t very nice, which is not much of a surprise unless you’ve been living in a cave for the last five years, but you have to say that the overall tone was actually surprisingly positive.

Yes, it’s going to hurt, but we knew that anyway. We’ve had the usual suspects leaping up and down in a fury about a return to Dickensian England and the public sector is up in arms about facing the same pain that private industry has been through already, but all in all I thought it was quite well judged. Let’s just hope that it has the desired result!

With my freelance hat on, it was actually pretty much neutral. I’m not planning on opening a new company and employing people so the National Isurance incentives won’t touch me the slightest, but they will help people who do want to build up their businesses. The eventual VAT rise will hurt of course, but it’s only 25p extra on something costing £10, so personally I can live with that.

The personal tax allowances are nice as well, as is the promised reduction in Corporation Tax rates. As a jobbing freelance contractor – well, when I get a job that is – I’m actually quite relaxed about it all.

The other bit of news tucked away in the Red Book (or as Cameron said to Harman at PMQs this week, in her case the “unread” book) 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.

Welcome news indeed, although we won’t break out the champagne until we know exactly what is going to come after it.

Elsewhere in the real world I’ve been plunged back in to the chaos and misery of having to deal with agencies offering work that they don’t understand on behalf of clients they don’t know to contractors they don’t want to talk to and whose CVs they utterly fail to understand. I’ve spoken to five this week and have absolutely zero confidence they know what they’re doing.

Call me an old curmudgeon but in my not inconsiderable experience it’s about one in fifty that does the job they way they tell the clients they do, so I guess I’ve a few more pointless and frustrating phone calls to get through yet. Come the revolution, I know who I’ll be putting against the wall first

Still, let’s be positive, if the reaction to the budget is positive, there may actually be some real work out there.

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At last…

After 10 years of beating our collective heads against a brick wall, there is a clear commitment from the Government to do something positive about IR35. Right there. In the full manifesto. In actual black and white. Forgive me while I indulge in a loud cheer and a large whisky.

Of course, we don’t actually know the details, such as when. Also, a lot of the tax plans are based around the Lib Dems’ ideas, which include worryingly non-specific threats to address avoidance. Sure you don’t mean tax evasion, chaps, I mean that’s the illegal one, isn’t it? Whereas avoidance is not only legal, but was actually condoned in the House of Commons back in the 20s.

On the other hand, of course, the Conservative side of the side of the House (if you see what I mean) are talking loudly and clearly about helping small businesses. Let’s just hope the two cancel each other out and we get some sense.

To be fair, I like what I’m hearing from the new Government. There is a clear sense that they want to unwind a lot of the major stupidities of the last 13 years (and let’s face it, there are plenty to choose from!), so I’m mildly hopeful. Even if IR35 itself isn’t deleted but wrapped up in a sensible set of criteria that we can all understand, that I could live with.

On the other hand, the Public Sector looks to be in for a hammering, (although the commercial job market seems to be taking off big time), with talk of serious budget cuts across the board. I’m taking a close interest in all this of course, mainly because the current contract is about to stop and I need to be looking for gainful employment again. I have actually had a positive response but, as is the way of such things, that was a week ago and it’s all gone quiet again. Also it’s hard to job hunt when you’re working. The basic approach is to find the role, rearrange the CV to highlight the relevant bits of your vast experience so the agency will see that you can do the job, mail it in, wait about ten minutes then phone them up and do the sales pitch – if you can catch them, of course, which isn’t always possible. Usually isn’t, in fact…

Except you can’t really do all that three times a day sat at your desk in an open plan office. Especially when you’re the boss. Hence I’ll be taking a week off soon and hitting the phones in anger.

Know anyone wants some Services Delivering?

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