Breaking news! Does today’s Autumn Statement harm or help Limited Company contractors?

Breaking news! Does today’s Autumn Statement harm or help Limited Company contractors?

Philip Hammond today delivered his first Autumn Statement as Chancellor of the Exchequer (and his last). He and the Prime Minister continue to compete for control of economic policy and are arm wrestling for the “glory sound bites”. Unless they get on the same page, the losers of this Pyrrhic victory will be you and I.

 

Famous for ill-conceived strategies implemented at a dangerous pace in the face of universal criticism, and ignoring calls for caution from industry experts (who HMRC asked for advice in the first place), HMRC and the Treasury just keep ploughing their own furrow regarding the flexible workforce.

 

Today’s statement offered public sector contractors no surprise good news, and worse no reason for private sector contractors to be optimistic. HMRC’s vision for a level playing field between employees and the UK’s flexible workforce continues to be deployed in the face of all arguments to the contrary. Mr Hammond continues to imply that anyone who is not taxed under PAYE is a tax dodger, and that any independent worker wanting to trade as a Limited Company is only doing so for the tax benefit. I wonder if this is a real belief or a view necessary to keep his job in a post-Brexit, post-Trump world of pragmatic politics.

 

HMRC are JAM (“Just about managing”)

“Passing the buck” is now officially written within the Autumn Statement. When policing employment status compliance gets too tough for HMRC and they end up in a JAM, they outsource the problem to the public sector supply chain (only affecting public sector contractors) and ignore advice from stakeholders telling them it will not work!

 

It’s such a pity that the Chancellor refuses to accept that the positive contribution from a vibrant flexible workforce is widely recognised by stakeholders as essential to the prosperity and economic recovery of UK plc, and therefore dangerous to ignore.

 

“Hammond and May never listen” ( I sound like Jeremy Clarkson)

Throughout the summer HMRC have “consulted” Industry experts, Accountants, Business leaders, Trade Associations and even the man on the “Clapham omnibus” searching for views and comment on key topics including: IR35 reform in the Public sector, and Making Tax Digital.

 

I wish that I could understand why HMRC are not listening. A significant proportion of stakeholder responses on both consultations are consistently negative about:

 

  • the unrealistic timetables being imposed
  • the lack of attention to detail in the implementation guidance
  • the absence of the digital tool for IR35 status assessment
  • the administrative burden being outsourced from HMRC to employers, service providers and taxpayers in an attempt to reduce HMRC’s cost of delivery
  • blanket self-justifications from HMRC of their own actions, which ignore the advice of the wider community and which do not stand up to intellectual scrutiny

 

There seems little evidence from today’s statement that smart people who work at HMRC are using their ears. A consultation process, which has merit in concept, becomes a waste of everyone’s time if consistent contributions from stakeholders across the UK are continually ignored.

 

“Hammond’s way”

So Mr Hammond let’s try it your way: Push on with the policy of forcing independent flexible workers in the public sector into a taxation straitjacket against their will, and against the will of the end hirers. Engagers (even public bodies) want control over the ease with which their business units can expand, they do not want to provide employment rights, and flexible workers are not asking for them. But to do that you will need to continue to vilify and call “tax dodgers” hardworking and proud independent workers, who are trying to put their family’s wellbeing ahead of their own.

 

Make sure that the public don’t work out that by passing the buck for determining Employment Status (because HMRC have failed to find a way to get it right) and by passing the costs of doing so on to the engager or supply chain, saves the Government plenty of cash (because I doubt you will ever find c£400m of “tax gap” that you’re looking for from contractors). Make sure also that the workers don’t blame you for the fact that their take home pay is being reduced, as the supply chain adjusts to protect its margins.

 

Proposals to remove abuse under existing flat rate VAT rules will follow in December and could affect the many innocent parties seeking fairness not abuse.

 

I am not saying that non-governmental stakeholders have exclusive access to crystal balls, but we do have ears and we use them more than you do. Your statement today affecting the contractor community is only as strong as your ability to get the implementation right. If I were to buy you and your colleagues at HMRC a Christmas present, it would be a large hearing aid. If you wanted to give independent contractors in the UK a Christmas present, just turn it on.

 

Want to know more?

Before the statement, we released our own set of predictions and wish lists on what we thought would happen and what we wanted to see announced. So were we correct? We will be sending out our full Autumn Statement review tomorrow, simply leave us your email address and we will ensure you are sent a copy.

 

cat catch the mouse

 

This blog has been prepared by Intouch Accounting. While we have made every attempt to ensure that the information contained in this blog has been obtained from reliable sources, Intouch is not responsible for any errors or omissions, or for the results obtained from the use of this information. This blog should not be used as a substitute for consultation with professional accounting advisers. If you have any specific queries, please contact Intouch Accounting.

George the Builder! Can he fix it? George the Builder, yes he can!

George the Builder!

Autumn Statement 2015

Were you panicking before yesterday’s Autumn Statement? Are you a contractor still trying to work out if little news is good news? We’ve scoured the official documents and applied our vast experience in the contractor market to unpick what yesterday’s speech means for you – and we’re pleased that what transpired was far less than was feared. So what did we actually learn from the Chancellor?

 

At 12:30 we, along with the rest of the contractor community, waited with baited breath to see what George Osborne had up his sleeve. He issued his Autumn Statement amongst a background of rumour and sanctioned leaks concerning changes to both Travel and Subsistence (T&S) and IR35. Whilst we know change is on it’s way, we got very little further clarity. By the time we had finished our sandwiches, the uncertainty that had dogged the industry had passed. We’ve analysed what we already know and our experience of how these things work to predict how we think IR35 and T&S will progress – you can read more about this in our Autumn Statement summary.

 

George the saviour?

Yesterday’s speech was made up of an Autumn Statement and a Spending Review –  among many rabbits Osborne pulled out of his hat we saw a U-turn in tax credits, protecting the police budget, half a trillion pounds being pumped into the NHS, investment in infrastructure…and a resounding silence in contractor specific issues such as IR35. In the weeks leading up to yesterday, there had been unprecedented speculation in the media and among the contractor community about what was expected to be a huge blow to Umbrella and personal service company (PSC) workers. Instead, what we heard was a loud sigh of relief from much of the temporary workforce.

 

Beyond the speech

We have long realised that it is not the speech that is the issue but the detailed documentation released afterwards. There were a vast number of publications and announcements that followed the Chancellor’s speech containing much greater detail to what was said.

 

On page 116 of the Blue Book you will find clause 3.20: a single, short paragraph of text setting out the decision on T&S for intermediaries – but once again this confirms that nothing has been confirmed!

 

Our Autumn Statement summary looks at the facts emerging from yesterday. But we know you’ll be most interested in making sense of possible future changes. So we’ve applied our years of experience and industry expertise to analyse what’s happening with IR35 and T&S, the role of supervision, direction and control (SDC) and our best prediction of where they are heading. Download it now.

 

Osborne: friend or foe?

Perhaps yesterday’s shock shows that the Chancellor has bigger fish to fry and he’s putting his energies in tackling the issues that he can actually sort to achieve a positive impact on our economy. It seems that, in the great scheme of things, IR35 (whilst dear to our hearts) comes below tax credits, working families, education, health, policing and security, affordable housing and the living wage. Osborne showed his commitment to protecting what people care about – defence, policing, healthcare – and in doing so may have actually paved the way for contractors who work in these industries. Finding £27bn down the back of the sofa will have no doubt helped!

 

UK plc cannot operate optimally without a flexible workforce and it’s reassuring to see that this government seem to have woken up to the harm they could cause by implementing ill-thought through changes.

 

What became clear yesterday is what was already feared by Umbrellas and if you’re contracting through one at the moment, you’re likely to have just lost your T&S expenses and it’s a good idea to consider your options. If you’re committed to contracting and want to continue enjoying the flexibility and maximise your take home pay, let us help you navigate your choices.

 

What’s next?

The next key date in the contractor diary is 9 December – the day when we’ll find out more about proposed legislation. Then we can more accurately assess the future landscape and plan the way forward for you. Rest assured, knowing we’re on hand to provide the clarity you need around announcements affecting UK contractors. Our clients know they can rely on us to make sense of any changes so they can focus on the job in hand.

 

We’re committed to contractors and work with over 2,000 every day. As an Intouch client you’ll get the best expert accountancy you need translated in a way you’ll understand. We’d love to tell you more – contact us today.

 

Does the Autumn Statement show Osborne as a friend to legitimate contractors, or a wolf ready to pounce when emotion recedes? Let us know your thoughts.

 

This blog has been prepared by Intouch Accounting. While we have made every attempt to ensure that the information contained in this blog has been obtained from reliable sources, Intouch is not responsible for any errors or omissions, or for the results obtained from the use of this information. This blog should not be used as a substitute for consultation with professional accounting advisers. If you have any specific queries, please contact Intouch Accounting.