Tag Archive | "contractor"

Do You Qualify for the “Age Tax?”


Everytime politicians get together there is one subject at the top of their list. Guess what it is? TAX…of course. What else? Nothing.

So it comes as no surprise when MP’s recently came together in the Houses of Parliament and decided to rain down more tax fury on the innocent contractors, freelancers and business owners.

Yes it is YOU. The victimised contractor who is in the firing line once again. And who is pulling the trigger…is it notorious tax hound Philip Hammond? Actually no. Not this time. Its a different guy. One you might not have heard of before. But I guarantee you will hear his name a lot more. That name is…

Matt Hancock!

This is the name of the Health Minister, and the same guy who has just announced something called…

The Age Tax!!

Mr Hancocks plan is to get you paying more tax (as if you were not paying enough already) and it comes under the name of the “age tax.”

Do you qualify to start paying this age tax? Well, if you are over 40 and you are a contractor, freelancer, a business owner or just self employed in general…then you might have to start paying BY LAW, very soon.

If Matt Hancock gets his way then this age tax will become compulsory, which means you won’t have any choice in the matter.

In fact, if you work for someone else or you have regular clients who you do jobs for…then it will automatically get taken out of your pay packet.

“Where did all my cash go?” You say to yourself when looking at your bank account.

But you know the answer…don’t you? It will be that age tax and all of the other tax these politician vampires try to suck out of you.

Why are they hitting you up with this “age tax,” anyway? The main reason is because the over 65s need more care, and of course, you will also be over 65 yourself, some day.

If you want our nations elderly to looked after, and you want yourself to be looked after when you get there…you should welcome the age tax with welcome arms.

That’s what Mr Hancock wants you to think. In reality, the truth of the situation is the government need more cash to plug up their sinking ship.

The Captain, Theresa May, is way off course, and doesn’t know her ankle from her elbow. Let’s be honest here.

The Vice Captain, Philip Hammond, has noticed the water seeping through the cracks and is doing anything in his power to stop that water. The more he tries…the more water comes through. He is swimming against the tide, although he doesn’t realise it.

The Cabin Boy, Matt Hancock, is up to his neck in water down below. He is now desperate, and in pure desperation has introduced this age tax.

Posted in newsComments (0)

Hammond The Henchman


Our Chancellor Philip Hammond has been quiet recently, hasn’t he? That tax grab of his last year FAILED, but I predicted he would be back.

And back he is…with a vengeance!

Right now, as we speak in October of 2018, it has just been reported that Philip Hammond is planning a fresh tax grab on our nations self employed.

That includes contractors and freelancers. Nobody is safe from this guy.

Experts are claiming that all will be revealed during the upcoming budget, which will happen later this month.

That is the day he comes out from his bunker with his briefcase, and smiles for the cameras. Although when you look into his eyes you a see a different story.

It is the story of a man who has spent the last 12 months plotting and scheming. His barely contained rage against his failed tax grab has bubbled to the surface, and now it is pay back time.

There are some who claim that Philip Hammond is not the main Don in this gang. Those people claim that Hammond is merely a henchman and it is others who pull his strings.

Maybe they are right or maybe they are wrong, but what I do know is that when “Hammond The Henchman” goes after our nations self employed at the end of the month, there will be uproar in the streets.

Signs will be printed…people will take to social media…and there may even be a drop in support for the government in the polls…but…this time Hammond is expected to push the tax grab through and have his way.

The new tax grab is expected to bring in an extra £1.2 billion pounds a year. It goes straight out of your bank account and directly into the government bank account.

Hammond is no doubt rubbing his hands at the thought of all that cash, and once he has done his “sneaky” grab he is expected to return to the bunker and not be seen again for another 12 months.

So what can you, a hard working and law abiding contractor do about it? Should you get on the streets in protest or even leave the country and look for a tax haven?

My advice is stay where you are and be smart about the situation. If Hammond wants to do another tax raid then you need to be prepared, and the best way to do that is by hiring a contractor accountant.

Most contractor accountants have seen this tax grab coming a mile off, and they have already worked out ways you can avoid getting slapped in the face after the budget.

“Pay less tax (legally),” is the motto of our recommended contractor accountants. Contact one of them right now and see what they can do for you.

Posted in newsComments (0)

In YOUR Bank Account? HMRC Could Gain New Powers


If the tax man comes a knocking then under current rules they need permission to look in your bank account. No More! Potentailly…

New rules are possibly about to be introduced right now, as we speak, where HMRC will have the power to gain access to your bank account and snoop around…without any permission.

There will be no warning and no “polite request.” Even your bank manager can’t stop them. In fact, the bank manager doesn’t even have to tell you.

It’s thought the new rules would mean HMRC can look at your bank statements and you would never know anything about it.

Under the cover of darkness they pounce, like cat burglars in the night.

The key is left under the mat, no need for a crowbar.

Banks typically have to tell their customers if a tax official wants to snoop around in your bank account.

These usually come under the guise of “information orders” which are official requests from HMRC to look closer at the financials of someone they are investigating.

However, it seems HMRC are becoming frustrated with the amount of time these information orders take to process, and that is why they want to speed up the process by eliminating them once and for all.

In other words, they want the magic keys to your bank account. No permission required. And it looks like they are going to get it.

Uproar is the mood among critics and experts in the media world when they heard about all of this. Many believe it is a breach of privacy.

Take James Daley for example, who is the managing director of Fairer Finance. He recently said – “The system we have contains essential protections for taxpayers privacy and rights. The idea that HMRC can request information from people’s bank, from state agents and other third parties without notifying the individual is shocking.”

HMRC have hit back against the onslaught by reassuring people that nothing has been decided yet, one way or another.

“We are considering a range of options,” said a spokesperson for HMRC.

They also went on to add that even if these new powers were brought in…even then, only a few hundred cases a year would warrant it being actioned.

Still…if you want my opinion then listen closely because I am only going to say this once.

If you are a self employed contractor then it is more important than ever before to get yourself a good accountant.

Sure…you might not be doing anything wrong and you might very well consider yourself a man or woman of great reputation within the community. But…

If HMRC can gain entry to the castle, so to speak, without your knowledge, then if you ask me it is more important than ever before to make sure everything is in tip top shape.

Hire a contractor accountant right now. Do not delay another second.

Posted in newsComments (0)

“Toughen Up” Say The HCPAC


In a recent meeting the HCPAC (House of Commons Public Accounts Committee) came up with two words…”Toughen Up!”

Who was these two words aimed at? HMRC (Her Majesty’s Revenue and Customs).

The meeting was a long meeting, there is no doubt about that, but the conclusion was short, and with those two words there has now been a chain reaction which could see many contractors and digital traders fall foul of HMRC.

According to HCPAC it is you, the average contractor, as well as thousands of digital traders who trade on platforms such as eBay and Amazon, who are avoiding their VAT (Value Added Tax) duties.

Could notorious tax hound (Philip Hammond) be the chief architect behind this new push for “more tax?” While he isn’t officially on the HCPAC, there are some experts out there who claim he is the one “pulling the strings.”

So the memo to HRMC is crystal clear…”Toughen Up” and crackdown on those tax dodgers who are depriving the government bank account of millions, and perhaps, even billions.

One pundit claims that somewhere between 1 billion pounds and 1.5 billion pounds worth of VAT is being missed out on, although it is difficult to know the exact figure until all the money is collected.

It could take a while, because as we know, many of these online eBay and Amazon traders fly under the radar and cover their tracks…avoiding their VAT duties, year after year.

Hard working contractors such as yourself…obviously YOU don’t avoid your duties and you do everything by the law.

You fill in your tax return and send it off on time, every time.

You get your tax bill and say “do you take a cheque? Every time.

You pay your National Insurance every time.

You pay your VAT every time.

The problem is that Philip Hammond will never stop, ever, until he has 100% of your income safely in the government bank account.

These new tax grabs are becoming more common, and as Mr Hammond becomes more sophisticated in his approach, he can easily pull the wool over your eyes and bring in new laws and regulations without any attention.

This is why you MUST hire a contractor accountant. Even if you are NOT a contractor.

If you are reading this news story and your business is trading on eBay or Amazon then you should also make it your main priority to hire an accountant right away.

Don’t delay, because Philip Hammond is on to you…which means you need to know how to legally pay less tax and beat him at his own game.

Posted in newsComments (0)

129 Premiership Stars Accused of Tax Avoidance


It was only a few weeks ago that Wayne Rooney was under scrutiny for tax avoidance…well, now you can add 129 more players to the list.

Not just any football players either. These are top of the line Premiership Stars we are talking about here. The kind you see on Sky Sports and BT Sports week in and week out, diving around and hugging each other when a goal is scored.

Yes, it is those very stars who are now being looked at very closely by HMRC. 129 to be exact, although the names are yet to be released.

What we do know as of right now is one player on the list is a very famous ex Manchester United Star.

Apparently, this former red put nearly 33.5 million quid into something called a Kingsbridge scheme, in what HMRC are claiming was tax avoidance. The taxman is now trying to get at least 70% of that cash back.

Are these just helpless football players who didn’t understand what they were doing, or are they cold and calculated…ready to avoid tax at all costs? Many experts are claiming it is the latter, and with the help of clever accountants they are avoiding millions in tax every single year.

Of the 129 Premiership Stars on the list, it is estimated that a total of £250 million was put into the Kingsbridge scheme, although some pundits say this could just be the start of an avalanche that might send shockwaves through the footballing world.

Another of the clubs named on the list is Liverpool, so we can be sure that it will be headline news around the world when everything is eventually revealed.

Which brings me to an important point. In my opinion, I think there is a fine line between hiring a good accountant and hiring an accountant that is “too good.”

Take your average contractor for example, who might not be able to hit a barn door with the ball at their feet and probably wouldn’t do very well if they took to the pitch at Old Trafford or Anfield.

What contractors do have in common with Premiership Stars is the desire to pay less tax. That is something everybody wants.

The difference is that doing it legally won’t get you in trouble with HMRC, while doing things that are considered shady like investing in offshore schemes, well, that will get you in trouble.

That is why you want to be careful of accountants who try to claim you won’t pay any tax at all. It just isn’t possible (legally) and I reckon some of these football players might have been taken in by the hype.

Instead, what you want to be doing is hiring a contractor accountant who is good, and can save you tax (legally), but also keeps you on the right side of the law.

Posted in newsComments (0)

Tis The Season For Online Tax Returns


Turkey and mince pies, that is what the majority of people focus on during Christmas. Some people though, it’s all about those online tax returns.

According to HMRC 10,000 tax returns have been submitted over the 48 hour period of Christmas Day and Boxing Day, and apparently, there was even 92 submitted during the 1 hour period of 11pm and midnight on Christmas Eve.

That’s right. While most kids are in bed waiting for Santa and the majority of adults are drinking sherry and singing carols, there was 92 hard working self employed people busy at their computer, making sure those online tax returns were correct and then sent in to HMRC.

It was then 2500 online tax returns that were sent in on Christmas Day. While others unwrapped presents and watched television with the family, these dedicated contractors, freelancers, and business owners didn’t want any of it, and instead, decided to get their tax return done so they could cross it off the list.

On Boxing Day another 7500 online tax returns made there way into the HMRC inbox. Of course, Boxing Day was traditionally the day for giving gifts and unwrapping those presents, but these days it seems most people do that on Christmas Day, which makes sense really.

However, most people do like to relax and unwind on Boxing Day…maybe go out for a drink or finish off the leftover turkey. Online tax returns are usually the last thing on their mind, but for 7500 of our nations self employed it was their main priority.

This seems to confirm an overall trend that online tax returns on Christmas Day and Boxing Day are becoming more popular.

For example, last year 8000 online tax returns were received by HMRC during the festive 48 hour window, with 2000 on Christmas Day and 6000 on Boxing Day.

So 2000 more people were logged on and filling our their tax returns this year, and the HMRC think it has a lot to do with their online advertising reminding everyone to get it done on time.

The advertising features ducks quacking and has no doubt caught the attention of many, with the reminder to get your online tax return in by the 31st of January. Paper tax returns should have reached HMRC by October 31st of course.

My advice to anyone who still has not submitted their online tax return is to get it done as soon as possible.

Sure, you might be too busy during this festive period, and certainly didn’t have the time on Christmas Day and Boxing Day, but you should do it sooner rather than later if you ask me.

There will still be millions on January 31st rushing to get their online tax returns in on time. You can count on that.

If they get it done now then they could relax, or they could even use this website to find a contractor accountant and let them do all of the hard work.

Posted in newsComments (0)

Digital Entrepreneurs Could Save £400 on Tax


Every year thousands of people try their hand at a bit of digital entrepreneurship. It’s easy enough, all you need is a computer and internet connection.

Take eBay trading as a prime example, where all you to do is sign up for a free account on their site and you are good to get started selling your products for a profit.

This has led to the government introducing a new tax scheme that has been billed as the “eBay tax allowance” or a “tax break for the digital age.” The main idea behind it all is that online entrepreneurs on a low income could save up to £400 a year on tax.

We have the previous chancellor, George Osborne to thank for this one, as it was him that came up with the idea in March 2016. Well, now they are getting ready to implement the idea by putting it into action.

However, not everybody is convinced this is a such a good idea, with some experts arguing that while there are a few digital entrepreneurs on a low income that will benefit, the vast majority will pay more tax as a result.

Not only that, but they also argue that these new tax rules are so complicated that you would need to hire one of the best accountants in the country just to understand them.

This is why many people are expected to get things wrong when filling in their next tax return, which will then result in them either paying more tax or getting fined by HMRC for mistakes.

I thought the main goal was to make the subject of tax in the UK simple and straight forward? That seemed to be the way the government were heading a few years ago with the whole “making tax digital” and “quarterly tax return” plans, but when they were shelved it now appears they are back to making tax a complicated subject once again.

That is why I always advise anyone…it doesn’t matter if you are a digital entrepreneur or contractor…the best thing you can do is to hire an accountant and let them tell you the best way forward.

Even if you are a digital entrepreneur with a low income, hiring an accountant is really a smart move, because no matter how much you make…they will save you money.

Back to this new “tax break for the digital age” and I’m sure the government are going to run with it and see how it all plays out. Maybe it really will work and thousands of online entrepreneurs can save up to £400 a year.

Posted in newsComments (0)

Jetting Off to Paradise…


The tax dealings of several high profile people and companies in the UK has hit the news, some are calling it the “Paradise Papers.”

Of course, this comes on the back of the so called “Panama Papers,” which were released last year and gave us more of an insight into the potential wrongdoings of celebs and high profile figures.

It has long been an accusation flung at millionaires and billionaires in the UK, with rumours of offshore accounts and complicated tax structures. No doubt they hire good accountants, but who knows for sure what is going on. Nothing has been proven in a court of law as far as I’m concerned.

Many experts have reported that those in the “Paradise Papers” have sent money to offshore accounts in some of the nicest places on Earth. Take Mauritius as an example, one beach resort where many people would like to jet off to, especially as the UK winter starts to take hold.

Apparently though, it isn’t shorts and sunglasses in the suitcases…it’s millions in cash. So they say anyway.

Take her royal highness, the Queen, who was named in these papers as one of the people who has sent money abroad. £10 million to be exact, which found its way to the Cayman Islands in 2005.

A spokesperson for the Queen has responded to the criticism by commenting that any investment was “fully audited and legitimate.”

From sitting on the throne to sitting behind the wheel of a Formula 1 car…the next person connected with paradise was none other than Lewis Hamilton.

One pundit noted how Lewis purchased a £17 million private jet, but avoided paying any tax on it in the UK. Who knows for sure what happened? A spokesperson for the driver did say that all was “above board” regarding the transaction.

No doubt Lewis Hamilton couldn’t resist getting his very own private jet, but what about buying a shopping centre? That is what world renown musician Bono did, who decided that Lithuania was the place to invest in retail.

They say it was purchased through a company in Malta, where tax is much lower than the UK. However, Bono AKA Paul Hewson has gone on record to state “I’ve been assured by those running the company that it is fully tax compliant.”

Good for him, and just as a side note, if you find yourself in a Lithuanian shopping centre and U2 is playing nonstop in the background, then you know why.

Another set of names mentioned in the “Paradise Papers” was some of the stars of BBC sitcom Mrs Brown’s Boys.

As regular readers of this blog will be only too aware, I’ve reported on the potential tax failings of BBC stars before. Could it be they have found new ways to avoid paying tax? Who knows for sure, only a court of law can decide that.

Most contractors and freelancers are not jetting off to paradise any time soon and they are not sending off a suitcase of cash. Instead, they are only bothered about finding a quality accountant to look after their finances. All above board and legitimate…find one right here at this site.

Posted in newsComments (0)

Only 3% Learn About Self Employment in Further Education


While the UK is going through a self employment revolution right now it appears your average college and university have not got the memo.

This comes on the back of research which suggests that only 1% of freelance professionals learnt about self employment in college, with a further 2% learning about it in university.

Instead, the message in college and university still very much seems to be a traditional one with “get a job” or “choose a career” being the main things you will hear.

Despite students not hearing words like “go out on your own” or “work for yourself,” that hasn’t deterred the British public from setting up their own shop though, especially 16 to 29 year olds who are really embracing the freelance and contractor lifestyle.

Recent estimates put our nations self employed at nearly 5 million strong, with some experts claiming it won’t be long until we hit 10 million. I’m not sure this figure will be reached anytime soon, but the one thing I do know, is that if college and universities have anything to do with it we won’t ever get there.

To give you an example of how out of touch further education is with self employment…the arts and media industries is currently going through boom times in the UK with thousands of people working for themselves in this area, but in college and universities there is absolutely no education regarding self employment in arts or media subjects.

You couldn’t make it up really, and it just goes to show how far behind the times many of these places are.

Things are changing, although slowly, as organisations such as the IEEC (International Entrepreneurship Educators Conference) are touring cities around the UK to better educate the educators, so to speak.

Not only that, but some further education establishments are catching up and getting with the times. Take Middlesex University as an example, who are currently implementing modules within their courses that provides guidance on entrepreneurship and self employment.

The IPSE (Independent Professionals and the Self Employed) have also gave their opinion on all of this, and what they say is that many young people want to work for themselves but are put off because they don’t yet have a “big idea.”

Maybe TV shows like Dragons Den and The Apprentice have put too much emphasis on the so called “big idea” in order to start a business or go self employed, and this is also what is taught in further education.

Instead, the message to young people should be more realistic if you ask me, with a major focus on the fact that it really is all about getting started and gaining experience.

Sometimes that “big idea” or “big break” comes when you least expect it, but you have to be in a position to take advantage of it.

Of course, many young people are not taught anything about self employment in college and university, which means many of them have to work it out themselves.

Posted in newsComments (0)

800,000 Miss Tax Deadline (Contractors Included)


The HMRC have just released a statement saying that 800,000 self employed people missed the self assessment tax deadline this year.

That is 1 in 14 people who just couldn’t be bothered to get their tax return in on time, or perhaps they didn’t understand how? Who knows exactly, but what I do know is that it’s now easier than ever before to do your tax.

You don’t need to get any forms or send anything through the post. Everything can be done online at the HMRC website, and in the next few years they are going to be making the process even easier due to their “making tax digital” project which introduces a quarterly tax return.

Despite 800,000 people missing the tax deadline, some of whom were contractors by the way, HMRC said in their statement that things are getting better. Last year it was 8% who missed the deadline, while this year it was only 7%.

So that is 10.8 million people who did manage to get it in on time. I’m sure that many of those used a contractor accountant to get everything ready for them and even send the tax return on their behalf. It is the smart way to do things if you ask me.

Sure, hiring an accountant does cost you money upfront, but when you consider how much they save you in the long run then it’s a smart investment.

Not only that, but contractors who miss the tax deadline instantly get a 100 pound fine, which can become even more if the person still doesn’t send off their forms to HMRC.

What is interesting is that out of the 10.8 million people who did send in their tax return, 9.57 million did so online.

It just goes to show that many of our nations self employed are becoming more comfortable doing important tasks such as a tax return online, and this is one of the reasons why I think making tax digital will be a success when introduced in 2020.

Of course, it won’t be smooth sailing right from the start, and I’m sure that many people will take a while to get to grips with doing a tax return 4 times a year, but once it becomes the norm then it should make everything easier, to the point where 800,000 are not missing the tax deadline…although let’s wait to see if this happens or not.

As I’ve reported on before, there are just some contractors who find any excuse not to send in their tax returns, including excuses like the dog ate it and I don’t have the internet. Just what are some people thinking? The HMRC are having none of it though.

So the message here is clear…get your tax return in on time and don’t be one of the 800,000 who got a 100 pound fine recently.

Posted in newsComments (0)

Contractors have “Unfair Tax Advantage” says Report


In a report that is sure to make contractors laugh, the IFS, Institute for Fiscal Studies, have said that self employed people have an unfair tax advantage.

Do we really need another silly report where someone who doesn’t know what they are talking about, are paid to sit around and write about what they know nothing about? I’ve seen some pretty ridiculous reports and studies about contractors and the self employed, but this one really does take the prize for being one that went right into my bin.

To summarise the report in one sentence (you don’t want to read it, trust me), what they are saying is that the tax system treats self employed people differently to those who are employed, which ultimately means they end up paying less tax, even though employees are 85% of the workforce compared to 15% self employed.

Sounds to me like someone just doesn’t know what they are talking about, and are now looking for any excuse to take a shot at self employed people, contractors, freelancers, gig workers…you name it, apparently we all have some unfair advantage.

Do you know what? I am not even going to get into the numerous reasons why this report is wrong on so many levels, but what I will say is this…the UK needs self employed people now more than ever before mainly because the labour market is changing and we have a potentially tough time ahead with Brexit on the horizon.

If you get a few small benefits from being a contractor then it should be applauded, not criticized, although if you ask me there are very few of the self employed who pay less tax than their employed counterparts, and if they do it’s because they get themselves a good contractor accountant who can save them a few quid.

Not only that, but when you are self employed then you are in a completely different situation than employed people. No holiday pay for one. Do I need to go on? If anything, I think that contractors should be paying a lot less tax than employees, but we won’t be seeing that anytime soon.

One interesting piece of information is that the self employed are going to have to pay about £285 out of their own pockets when the government bring in the new digital tax system which will have to be done 4 times a year, not to mention the extra cost of hiring accountants and time away from their business.

Employed people won’t have to do that. Didn’t think of that did you IFS? There was a lot of things that didn’t occur to you it seems.

So you can ignore this new report from IFS, and just get on with being self employed. Even if you do pay a bit less tax, it isn’t unfair and you don’t have any advantage.

Posted in newsComments (0)

More Contractors Moving Towards “Gig Economy”


Thanks to digital sites and platforms, many contractors are choosing to do so called gigs rather than traditional freelance contract work.

Take someone like Ying Li Looi-Garman for example. She is a freelance video producer from Singapore, who finds multiple jobs every month on a gig site that makes up the majority of her schedule.

Millions of people around the world are doing the same, with many freelancers in the UK starting to get in on the act.

It doesn’t surprise me at all to be honest. Let’s face it, over the last 10 years a whole world of new opportunities has been opened up thanks to the internet, and it seems that in the last few years freelancers have been taking advantage of that.

It’s good for businesses of course. Instead of having to sign-up people with monthly, or even yearly contracts, they can simply visit a gig site, find someone who has the kind of skills they are looking for, and then pay once the job has been completed. It really couldn’t be simpler.

At the end of the day, it is all about flexibility don’t you think? Freelancers get the flexibility to set their own hours and choose the jobs that suit them without having to sign any kind of contracts, while at the same time business owners are experiencing the same kind of benefits.

If it works for both parties then I think we are going to be seeing a lot more of this “gig economy” in the future.

It seems not everybody is convinced about this new way of doing things. For example, the Recruitment and Employment Confederation released a new report recently that highlighted how more more should be done to put gig workers in the same bracket as other self employed traders, in order to protect their rights and ensure a fair and safe economy.

The report then went on to talk in length about how gig workers may end up becoming “exploited workers, who are self-employed in name only” which could end up taking a lot of power away from the freelance community.

Of course, there is pros and cons to any kind of new way of doing things. Nothing will ever be perfect. Ultimately though, my opinion is that if these gigs offer freelancers more freedom and choice, then it’s something that will continue to get more popular with each passing year.

It’s not ideal for every kind of freelancer or industry however, and the old way of doing things will remain strong among thousands of businesses and contractors in the UK, of that we can be sure.

If you are a freelancer then the best way forward is to enjoy both worlds if you can, and see which one suits you best.

Posted in newsComments (0)

HMRC Confirm IR35 Rule Change to Go Ahead


In a move that has sparked outrage among many contractors throughout the UK, it has been confirmed that HMRC are changing the way the IR35 is policed within the public sector.

This has been on the horizon for a few months now, with many experts predicting they wouldn’t actually go through with it. It seems like they were wrong though, with the new rule change expected to be enforced very shortly.

It was first announced during the 2016 budget by George Osborne, as he outlined his intention to clean up the public sector and catch out “contractors” who should really be classified as employees, and in turn pay more tax. However, many people are arguing that what will really happen is that innocent contractors will get wrongly and unfairly classified as employees, leading to them being taxed extra in the process.

A representative of HMRC by the name of Philip Horswill recently stated that 400 million pounds was lost last year due to around 90% of contractors in the public sector not paying the correct tax, although he defended the new IR35 rule changes, saying it was “not a tax grab.”

So what are we to make of all this? In my own personal opinion I can see both sides of the story. Yes there will be contractors who end up paying too much tax and lose a lot of the benefits they currently enjoy, while at the same time it goes a long way in helping to clean up the public sector and stop a lot of people cheating the system. Let’s face it, £400 million a year is no joke, and if this really is the kind of money that is being held back from HMRC then something needs to be done.

On a side note, there had been some reports that HMRC have been planning to roll out similar measures in the private sector over the next few months. However, Philip Horswill claimed this is not the case at all, and there are no plans in the future for more rule changes. I think this is the right move, as the public sector is quite a unique scenario in regards to IR35.

With all that being said, it’s expected that many contractors will challenge the decision once all the rule changes go ahead, with many experts predicting this may end up costing the HMRC a lot of time and money in contesting cases and appearing in court.

While this probably will end up being the case to some degree, there is no denying that HMRC needs to move forward in some capacity regarding the public sector and IR35. One thing we can all agree on…it’s certainly going to be interesting to see what happens.

Posted in newsComments (0)

Government to examine non-compete clauses


Non-compete clauses, the bane of anyone leaving their old job and starting out on their own, are to be taken a closer look at by the Government.

Individuals that decide to leave permanent employment in order to strike out on their own as a sole trader, freelancer, or contractor often run into some sticky wickets. One of the worst is when you end up boxed in by a non-compete clause, which are written into more than one permanent work contract. They certainly have a chilling effect on those looking to go into self-employment, as they bar individuals from competing with their previous employer. However, it looks like the Government is going to take a look at how non-compete clauses are enforced in the UK – at least according to a statement given by business secretary Sajid Javid.

In many cases, non-compete clauses aren’t enforced, and it’s usually when an employee with a specific career focus leaves a larger company that handles large-scale clients. Unfortunately a lot of the time such cases need to be proven in a court of law – and a brand-new contractor with little to no capital to prove that the non-compete clause doesn’t apply to them can find themselves stymied.

This is why the business secretary has called for evidence. Mr Javid wants opinions on non-compete clauses before he can take any action, but odds are there will be some action taken if enough evidence is presented that these clauses are causing barriers to Brits looking to become entrepreneurs. With the UK aspiring to be as innovative as possible, there’s a big push to continue that by encouraging start-ups and break down any barriers that are preventing this innovation from happening. Well, that’s what Mr Javid has to say about it, anyway.

Honestly I don’t know which way this is going to go. Non-compete clauses are certainly a thorn in the side of anyone bound by one if they plan to go their own way, or at least I think so. On the other hand, the big business lobby in the UK might not be so amenable to these regulatory changes any time soon, especially if they feel it will cut into their profit margins. Then again what else is new?

Posted in UncategorizedComments (0)

  • Switch Accountants for FREE

    Switch Accountants for FREEAt K&B Accountancy Group we have introduced a simple and straightforward approach to changing accountants. We’re offering contractors, consultants and freelancers the opportunity to switch to K&B Accountancy Group for FREE without the need to pay for any ‘catch up’ or retrospective accountancy fees for the previous year’s accounts and corporation tax return* *T&Cs apply

our top 5 twitter posts

twitter

contractor accountants

contractoraccts



twitter Join the conversation
Free Telephone Advice