Good news everyone! HMRC, in the face of a crippling strike from the PCS union which will see 80% of their call centre staff walk out on January 31st, have taken the decision to extend the deadline until midnight on Thursday February 2nd.
With the self-assessment tax return deadline looming, HMRC is facing embarrassment as thousands of their call centre staff are poised to stage a walkout on January 31st.
We recently reported on the Government’s tentative plans to introduce a General Anti-Avoidance Rule to tackle tax avoidance. A GAAR has been discussed in the past as a potential replacement for IR35, so the prospect of its introduction had the potential to rid freelancers and contractors of an unwanted headache.
HMRC has taken a lot of stick for its late filing penalties recently – and rightly so. The fines, which can easily run into the thousands of pounds for small businesses (even if they do not owe any tax) are completely out of step with those levied at companies orders of magnitude larger.
HMRC yesterday launched a pilot of an Alternative Dispute Resolution service for SMEs, which aims to reduce to need for tribunals during HMRC’s compliance checks. The scheme, which was trialled last year and saw 60% of disputes either fully or partially resolved, involves independent facilitators who work with both HMRC and business owners to ensure a quick and fair outcomes for both parties.
We covered with some degree of disbelief last year how the Government’s National Insurance Holidays scheme, designed to give new employers tax relief when taking on their first employees, had managed to attract a pitiful 1.8% of expected participants. Now the Labour party have renewed pressure on the Government to expand the scheme or abandon it altogether.
Many freelancers and contractors choose to complete their self-assessment themselves – if you can manage basic bookkeeping tasks you’ll probably be able to get your head around it. If you’ve decided to go the DIY route there are some deadlines to be aware of.
HMRC has been taken to task today by Conservative MPs and business leaders for their preferential treatment of large corporates, while attacking small and micro businesses through their Business Record Checks. The scheme will result in fines of up to £3,000 for freelancers, contractors and small businesses who cannot provide paperwork to back up the claims made in their tax returns.
About nine-and-a-half weeks ago the Agency Workers Regulations came into effect in England, Wales and Scotland, and following lots of corporate hand-wringing beforehand, October 1st came and went without incident, and most of the contractors impacted carried on as normal – it seemed like the Y2K virus of the employment world.
Joy of joys, it’s Christmas party season again! Time to don ye now some gay apparel, get some business cards printed and make sure you can fit all those important client parties into your schedule.
As we’ve covered extensively, HMRC has been upping their game with regards to tax evasion and avoidance in the last year. Be it their bookkeeping crackdown, their various VAT amnesties, or their closure of offshore loopholes, the taxman is on the war path, and if you’re not paying the correct tax you’re more likely than even to find yourself in his withering gaze.
I’d like a Second Job – what do I need to know? There has undeniably been a huge increase, across all professions, of people taking second jobs or finding an extra source of income by ‘moonlighting’. Getting a second job can be a great (or necessary) thing to do, and while it’s not illegal to have a second job, there are several issues you need to consider, to avoid jeopardising your main source of income. Here we describe what you need to know.
A valuable lesson today from the good folk at Her Majesty’s Revenue & Customs on the importance of filling out paperwork correctly. Having sifted through employee PAYE submissions for 2009/10, HMRC has found the the UK is apparently home to no less than forty people aged over 200.
The Agency Workers Regulations came into force on October 1st (this past Saturday). All temps, agency workers, and some umbrella company contractors now have the same rights as full-time employees after twelve weeks of service.
The saga of IR35 is full of twists, turns, loop-the-loops and groin-kicks, and doesn’t show any sign of letting up soon, following George Osborne’s decision to take the path of least resistance in his 2011 Budget. Following a freedom of information request from the PCG, HMRC has divulged some interesting figures which shed some light on HMRC’s tremendous mis-management of IR35.
Are you a freelancer or contractor? Do you live in or around Reading? Do you like receiving free advice on how to maximise your tax efficiency and manage your finances? Well then we’ve got good news for you!
Five plumbers have been arrested and around 600 are under civil investigation by HM Revenue & Customs (HMRC) for failing to pay the right amount of tax. The arrests and investigations have taken place during a campaign targeting plumbers which invited them to put their tax affairs in order.
The Government last week announced the location of 11 new Enterprise Zones, designed to boost local growth and create over 30,000 new jobs by 2015.
Many new freelancers and contractors may be vaguely aware of IR35, but not know when and where it applies. Before getting too intimate with the ins and outs of the IR35 legislation, the first step is to know if IR35 is even relevant to your situation.
Could the real reason for the delay in UK businesses receiving tax payment reminder letters be that HMRC ran out of paper?
The Association of British Insurers (ABI) has calculated that the cost of this weeks riots could be as high as £500 million. But what will be the cost to small businesses?
After being blasted for their performance in 2010 in a report from the Treasury select committee, HMRC Chairman Mike Clasper has issued a public apology, and has pledged that the taxman’s performance in 2011 will be radically improved.
A study by the Forum of Private Business has found that small firms are spending more time and money complying with Government legislation than ever before, with a massive 84% of businesses saying they have increased compliance activities since 2009.
HMRC staff are to begin calling new businesses to offer advice on how to correctly take care of their bookkeeping and tax obligations. HMRC is referring to this new practise as “telephone education”, and businesses will be contacted “at key stages in their lifecycles”.
Many Contractors choose to use the services of an existing ‘Umbrella Company’ – they are limited companies that employ Contractors. If you choose to do this, your contracts will be treated for tax purposes as if they are all inside IR35.
As part of the Government’s Red Tape Challenge a new initiative has been launched which invites small business owners to reveal their experiences of excessive red tape. The Red Tape Challenge was launched by the Government in April this year to give the public the opportunity to have their say on more than 21,000 regulations.
Following HMRC’s recent tax amnesty targeting plumbers, those strike-happy tax collectors have launched another campaign encouraging businesses with revenues above the VAT threshold (currently £73,000) who are not currently VAT Registered to come forward to admit their unpaid taxes – and incur a reduced penalty of only 10% of the the VAT owed.
The Time to Pay scheme was implemented set up during the recession to allow businesses to defer their tax payments. Over half of requests for rearrangement concerned less than £10,000 of tax, underlining the importance of the scheme to small businesses.
Accountants who have made the transition to HMRC’s electronic filing system have been set back by news that HMRC will not be ready to accept post-31 March 2011 returns until October when it will update its online portal.
Last week the UK’s coalition Government came under criticism from the Institute of Directors, a group representing business leaders across the country, for failing to reduce the tax burden faced by small businesses.
Last week marked the first meeting of the IR35 Forum, a carefully-selected group of freelancing, contracting and employment experts gathered by HMRC to aid their faltering IR35 reform attempts. Following the OTS report of small business tax reform and the Government’s subsequent inaction at the Budget, the forum was put together to look into better ways to administer the so-called “Freelancer’s tax”.
Although this does not relate to you, our honest and straight-laced freelance readers, we thought we would just fill you in on the latest HMRC initiative designed to bust the tax dodgers. Following their “amnesty for all” announcement HM Revenue & Customs have now unveiled a new tax evasion unit that offers reduced penalties for those who come clean on undeclared income.
Jon Norris | Guides,Legal,Money
It’s the freelancer’s perennial quandary – should I stay as a sole trader, or form my own Limited Company? There are advantages of both, but also some drawbacks to be aware of. Remember every situation is different – some people may choose to go Limited for the added weight it puts behind their company name, some people may choose not to incorporate to as they don’t earn enough to take advantage of the added tax efficiency.
Contractor Advisor | Legal,News
Following last week’s publication of the Office of Tax Simplification’s report on IR35, Contractor Advisor looks at the possibility of suspending the employment legislation altogether, and the impact that could have on the self-employment community at large.
With the recent various natural and human calamities in Japan, New Zealand and the Middle East, now is a better time than ever to think about donating to your charity of choice. Whether you are operating as a sole trader or a Limited Company, there are ways you can make your donations go further both for you and your Company.
A little while ago HMRC issued a warning about a series of email scams that had popped up in the wake of the January 31st Self-Assessment deadline. Using faked email addresses (usually rebate@hmrc.gov.uk), the nefarious scammers were informing people they were eligible for a Tax Rebate running into the hundreds of pounds, and asking for bank details to complete the transaction.
In the wake of the self-assessment tax returns deadline (and ensuing email scams), Unbiased have released their 19th Annual Tax Action Report, which claims that the tax paying UK public have handed over an extra £13.5billion to HMRC through mistakes, or by not operating tax efficiently. In a period of relative austerity, perhaps it’s time people took a closer look at their finances to ensure they’re not overpaying.
Everyone knows it’s okay to evade tax but completely wrong to avoid it, right? Wrong. What I meant to say is that it’s okay to avoid tax but illegal to evade it. Confused? You’re not the only one. I recently saw an interview on BBC News where tax polemicist Richard Murphy had to repeatedly correct a muddled newsreader over definitions of avoidance and evasion.
Jon Norris | Lifestyle & Time out
The Daily Mail’s attack dog Richard Littlejohn has applied more of his unique brand of “common sense” to the increasingly vitriolic debate on how to tackle the national deficit. The chancellor George Osborne has publicly asked for ideas on how to bring in more revenue, however we can’t see Littlejohn’s proposals holding much water.
While people are increasingly being refused the option to defer tax payments via the Time to Pay scheme, one professional service provider predicts that the year ahead will see the highest levels of personal insolvency on record. RSM Tenon offer the stark warning after the last quarter of 2010 saw a 24% drop in insolvencies compared to the same period in 2009.
The UK Government doesn’t seem to be too fond of Umbrella Companies at the moment. After announcing the closure of the offshore EBT loophole late last month, David Cameron’s rag-tag band of misfits has now issued a further statement on what it believes to be unscrupulous behaviour by some Umbrella Companies.
As many (hopefully all) of you will be aware, those good folks running the country have decided that as of today the VAT rate will be raised to 20%. While this has one distinct advantage (it’s easier to work out now – just divide by 5!), it also has one huge disadvantage – namely that from today things will cost more.
There have been some interesting developments of late which shed some light on what the future holds for IR35 – the legislation designed to close the loophole which enabled people to work as independent contractors when, actually, in spirit, being more akin to an employee.
Ever since Chancellor George Osbourne announced a review of IR35 in the Emergency Budget, many in the contracting community had their hopes raised for swift action.
With recent research detailing the colossal expense and burden of niggling administrative duties (apparently we spend 37 days each year on opening letters alone!), isn’t it about time we got hold of the red tape and tore it apart with Hulk-like strength?
Freelancers and contractors can help make their lives significantly easier by offloading many of the menial tasks that blight their day. First though, you need to know when’s the best time to outsource.
As we reported on Friday, new government legislation regarding the use of offshore Employee Benefit Trusts (EBTs) by Umbrella Companies as a means of saving clients money will now be passed into law, meaning the money-saving benefits of this method will be removed come April next year.
We’re receiving news via the Freelance Advisor batphone of a developing problem with Umbrella Companies.
Umbrella Companies, for those unfamiliar with the term, are large organisations run under Limited Company rules, who deal with freelancer and contractor national insurance and tax issues by essentially “employing” these individuals in their company (hence, “umbrella”).
With VAT rising from 17.5% to 20% in the new year, it’s worth asking what effect this will have on freelancers and contractors. The impact it will have on retailers is fairly obvious, they have to change all the prices in their shops to account for this change. For freelancers, the impact is not so straightforward and will vary depending on how they do their accounting.
Last week the government came clean on their future plans for pension tax relief. Now we’ve had time to digest the news, we’ve called in our resident financial planner – Paul Cleworth of Wealth Matters – to give you a rundown of the changes and how they’ll affect you and your business. Here comes the science…
Well, at least that is the deadline for the paper versions. Alternatively, if you’re doing your self-assessment returns online then you have a bit more leeway. Up until January 31 in fact.
Self-assessment returns need to be done if you’re self-employed or running your own limited company.
Freelancing has many advantages including the flexibility to decide when and where you work.
You will also have a wider variation of work with a number of contracts and clients as well as usually being paid higher rates of pay.
However, there can also be disadvantages, especially as you are responsible for all aspects of your business including finances, sourcing work and compliance with relevant regulations such as IR35.
For the UK’s freelancers and contractors these are uncertain times. With fears rife of a double dip recession and the scrutinous IR35 legislation coming under intense scrutiny, it’s difficult for micro-businesses to know exactly where they stand.
The latest tax planning seminar for freelancers and contractors, hosted by financial planners Wealth Matters, will offer a timely, in-depth insight into all the big issues facing your business. But be quick, it’s coming up very soon.
Well that’s the question being asked after it was announced that HMRC would adopt a new strategy in dealing with tax disputes.
Instead of taking a ‘black and white’ approach, resulting in court proceedings or no action at all, they will look to be more pragmatic in seeking agreements with individuals.
For a long time now there’s been much talk of the drawbacks and benefits of IR35. Well, mainly the drawbacks. But what of the measures that could potentially replace the complex and largely ineffective legislation?
One option which has been spoken about recently, involves the creation of a new General Anti-Avoidance Rule known by its acronym GAAR.
Last week the Government announced a 52% cut in the amount spent on advertising and marketing, leading to 287 redundancies.
One of the few Government campaigns to escape the axe was the HMRC’s ‘paying business taxes’ series of adverts which surely reveals a determination to ensure that businesses don’t escape their tax paying responsibilities. Freelancers and contractors should be on their guard.
IR35 has been the bane of many of a contractor since it was introduced back in April 2000. Recently the controversial legislation has been garnering much media attention after the coalition government promised to review it as part of their plans to simplify the tax system for businesses.
This makes it a good time to ask: what exactly is IR35?
VAT is defined by HMRC as “a tax that’s charged on most goods and services that VAT-registered businesses provide in the UK.”
The question is: when should you be VAT registered? And why? It’s time for a no-nonsense overview to provide some answers…
So far, so good. That seems to be the business community’s general view regarding the coalition government.
In a recent newspaper article, award-winning entrepreneur and freelancer’s friend, Darren Fell, gave his views on why he thinks now is a great time to start a business in light of recent tax changes.
It’s good news for UK contractors after the coalition government’s launch of the new Office of Tax Simplification. The body will be tasked with making the tax system in the UK less complex, which will include a review of IR35.
The swift launch suggests that the government is looking to change the tax system sooner rather than later.
As the dust settles after the June Budget Financial Planning Expert Paul Cleworth give us some good news for contractors.
TODO: Is a review of salary levels with your accountant requried?
In May, the newly formed coalition government wasted no time in making all the right noises regarding the stress inducing IR35 ‘disguised employment’ legislation. Through a combination of squawks, growls and shrill cries they promised to “review IR35, as part of a wholesale review of all small business taxation, and seek to replace it with simpler measures…”
The question is: can we expect any statements of substance regarding the legislation in the upcoming emergency budget?
July 20, 2010
A free event is being held at the Cumberland Hotel in London to help freelancers and contractors get informed about the financial issues that affect them. This will include a discussion of pensions, tax-planning, mortgages and investment among other things
The PCG’s continued lobbying of Tory top-brass has finally paid off in a firm commitment to a review of IR35 legislation by a future Conservative government.
The Conservative Party made the landmark announcement today that IR35 will be reviewed as part of an overall review of small business taxation should they win the General Election in May.
In a letter today to Chris Bryce, PCG Chairman, the Shadow Business Minister, Mark Prisk MP said that due to PCG’s strong representations to him and to Shadow Treasury Ministers “a Conservative Government would undertake a fundamental review of small business taxation matters, including IR35.”
The PCG’s John Brazier and Brookson’s Martin Hesketh respond to Alistair Darling’s budget.
How will the changes affect you and your business?
The deadline for online VAT returns is drawing close. As from April 1st this year, it becomes mandatory to file online.
Businesses that do not comply with the new online regulations will face a fine from HMRC.
From April 2010, if you have an annual VAT exclusive turnover of £100,000 or more, you will have to do your VAT returns online and pay any VAT due electronically.
But don’t worry, it’s the same form and just as secure as doing it on paper.
If you haven’t already, you’ll need to register for an online account at least 7 days before you do your VAT return. All the help and advice you may need about registration and online services can be found by visiting HM Revenue & Customs’ online services demonstrator: businesslink-online.hmrc.gov.uk/login
HMRC Start Up Diaries
The latest installment of HMRC’s [Start Up Diaries][] is now available to view online, offering freelancers, contractors and small business owners a unique insider’s view into setting up and running a new business.
From 1 April 2010, if you have an annual VAT exclusive turnover of £100,000 or more you will have to submit your VAT returns online and pay your VAT electronically. Also, if you register for VAT from 1 April 2010 onwards, you’ll have to file online from the start, whatever your turnover.
If you have read our guide to the expenses freelancers can claim the following guide gives some in depth information on how to claim your business expenses.
The Self Assessment online deadline is fast approaching – if you still need to do your Tax Return you must do it online by 31 January
If you’re using HMRC Online Services for the first time, you will have to register for an online account. You will then be sent an Activation Code within 7 days to activate your account.
Setting up a Limited Company is one of the smartest way to get paid for your work. With a Ltd you get to define your brand, own everything you do, run your business in the most tax-efficient way and pitch for work you wouldn’t be able to get as a sole-trader.
Some people, usually the folks at Umbrella companies, will tell you that setting up a company is costly and complicated but with low-cost solutions out there it’s a no-brainer.
In conjunction with PCG, Wealth Matters have been running a number of Contractor Seminars this year. When it comes to investing they’ve found quite a few questions keep repeating themselves among the 250-strong contractors in the audience. Today Wealth Matters’ Director Paul Cleworth answers these questions for a wider contractor audience.
Master-moaner and freelance freedom-fighter Malvolio takes a look at Tax and Employment Benefit Trusts (an alternative to Umbrella Companies that promise up to 25% more in your pocket).
Are these tax schemes a good idea for freelancers and contractors looking to earn a little more? Are they good for the UK?
The specialist freelancer and contractor-focused accountancy world is hotting up as Crunch continues to cause ripples in the sector. It’s been a busy month for Crunch with the news that the all-in-one online accountancy service has received investment from Bebo co-founder Paul Birch and Skype chairman Michael van Swaaij. Combined with news of an award [...]
Got a great accountant but lousy software?
Or great software but an accountant who wants everything in Excel spreadsheets?
Crunch Managing Director Darren Fell explains why choosing an all in one accounting solution can save you a lot of time and hassle when it comes to your year-end.
Darren Fell covers the correct steps to setting up your accounting system. Step 1: Find the good accountant Step 2: Make sure you like their software
The PCG, the association that represents freelancers and contractors in the UK, has revealed the exact amount of money raised by the Government’s IR35 tax regulation rules.
Following a request under the Freedom of Information Act to HMRC, asking just how much tax revenue IR35 raises for the exchequer, PCG have found that between tax years 2002/03 and 2007/08, IR35 directly raised just £9.2 million. This equates to an average of around only £1.5 million per tax year – a tiny sum in Governmental terms.
Michael Rose | Money,Resources
If you’ve read the tax overview and know what to expect this guide gives you a simple to understand guide to Self Assessment, National Insurance contributions, VAT, employing others (PAYE) as well as some of the help you can get in the form of Allowances, reliefs, incentives and Tax credits.
Essential reading if you’re starting out and struggling to understand tax and self-employment.
The PCG is a non-profit organisation that fights the freelance corner by lobbying government for better tax and regulation and promoting fair and ethical behaviour among recruiters. It also provides a host of tools and knowledge to its members to help them handle tax and regulatory matters properly.
PCG insider Charlie Bradburn tells us why they could be your greatest ally if you were ever to suffer a tax investigation and how their help-line can help you feel more at ease when confronted by a letter from the HMRC.
Michael Rose | Money,Resources
To help launch our new Resources section we’ve teamed up with Business Link and the HMRC: Over the next few months we’ll be offering the latest advice, guidance and short videos from the people who know.
If you’ve recently gone self-employed or are thinking about working for yourself this first PDF guide will give you an overview of initial questions you might be asking yourself when planning on starting a business.
Small business owners working from home should make sure they are claiming tax relief, an accounting firm says.
Target Chartered Accountants says business owners who work from home can claim several tax benefits, including mortgage interest.
Kasey Brunt | Getting a Job,News
HM Revenue & Customs (HMRC) has released a series of online video guides to help businesses and start-ups understand their tax requirements. The guides cover a variety of topics, including VAT, corporation tax and PAYE. They also cover areas such as importing and exporting, keeping accurate records, and things to consider when employing other people. [...]
Tax burden hurts small business HIGH taxes are hitting UK small businesses hard, new research has found. About 16 per cent of small business’ outgoings is spent on tax, according to financial business information firm Creditsafe. This means tax is the third biggest expense for most small businesses, freelancers and contractors, behind wages and investment [...]
For up to date details (2011) of Income Tax and NIC rates for Employees, Workers and Freelancers read this article.
Andy White | Lifestyle & Time out,Podcast
Part one of an interview with Steve Crouch of SRC Chartered Accountants. Steve answers questions on such things as salaries, dividends, section 660, IR35 and VAT. Topics covered: Limited company verses sole trader; Taking a small salary with big dividends; Section 660 – profit share between spouses; Consideration to IR35; When to register for VAT; [...]
#5: Five things you always wanted to ask your accountant - part 1 [ 19:08 ] Play Now | Play in Popup | Download
Heard of it? Most have but still it manages to send a shiver or two down the spine of even the most newbie contractor or freelancer who’s not quite sure! So what actually is it? Well essentially it’s the Inland Revenue’s (HMRC) definition of ‘self employment’ and it’s designed to catch those who are [...]
