IR35 Forum’s new business tests are already controversial – even before launch
The new business entity tests for contractor businesses have already proved controversial, before even being launched by HMRC. PCG, for example, believes there are too few questions to accurately determine the status of contractor businesses, and it seems that most non-HMRC members of the IR35 Forum disagree with the scores and weightings given to the answers. Early indications are that most contractor businesses could be identified as being ‘at risk’ under the current scores, but HMRC wishes to introduce them as they are, then assess their impact during a 12-month ‘test and learn’ phase. More...
Disguised businesses’ April Fool’s hoax – but it’s really not so funny
Last Sunday’s April Fool’s Day included ContractorCalculator’s ‘breaking news’ story detailing how 10,000 HMRC inspectors were being hired to target ‘disguised businesses’. The story, supposedly based on the small print in the post-Budget Finance Bill and leaked reports, highlights just how ludicrous are HM Treasury’s continued efforts to penalise entrepreneurialism by demonising genuine contractors as ‘disguised employees’. More…
Those controlling corporate budgets could be about to help create new contracts
For new projects to be signed off and contracts to be created, those controlling the money have to be happy. And the good news is that Deloitte’s latest survey of chief financial officers shows that most of them are happier – if not entirely happy – with the way things are going for the British economy. Most expect growth to remain sluggish, but despite this they see their priorities as introducing new products or services, and/or entering new markets – and those are just the sort of activities that create projects for contractors and interims. Despite gloomy forecasts from OECD that Britain might have re-entered recession, 70% of the finance directors surveyed disagreed. And that shows rising confidence, as at the end of last year almost half of them thought Britain might be heading for a ‘double dip'.
Rising growth and optimism in financial services can only be good news for contractors
The 90th CBI/PwC financial services survey shows that up to the end of March not only has the sector grown for the eighth quarter running, but that for the first time in a year there is a general rise in confidence. Plus, for the large number of IT contractors serving financial services firms, the good news is that companies plan to invest more in IT over the coming year. This positive news is based on the responses of 95 financial services firms, who also reported a rise in employment, which is expected to continue in the current quarter. If this rise in employees links to an increase in new projects and the restarting of stalled ones, it could prove very beneficial for financial services contractors across all disciplines. More… [PDF]
Financial transaction tax could drive contracts away from the UK – and the rest of the EU
Despite the positive news on the financial services sector (see above), clouds on the horizon could be forming in the shape of the European Union’s plans for a financial transaction tax. “The proposals place the City of London under severe threat and are likely to force financial institutions to relocate away from the UK and the EU as a whole,” according to a new report published by the House of Lords EU Sub-Committee on Financial and Economic Affairs. Contractors across most disciplines rely heavily on the UK’s financial services sector, so even if just a small proportion of firms left, it could have a significant impact on the availability of contracts. More…
In manufacturing, a good start to the year points to “a more sustained period of improvement”
Contractors in manufacturing have seen the positive start to the year maintained, with the latest Manufacturing PMI from Markit and the Chartered Institute of Purchasing and Supply (CIP) rising to a ten-month high. “The continued growth in manufacturing over the past few months points towards a more sustained period of improvement in the sector,” says David Noble, CIP’s CEO. But Rob Dobson, Senior Economist at Markit, warns that output growth of around 0.3% in the first quarter is “nowhere near a strong pace”, although he concedes that “it is at least sufficient to prevent the sector from remaining a drag on broader GDP growth”.
Manufacturing and services sectors are now “much stronger”, says BCC
Although the UK economy "is still facing huge challenges and the recovery is much too slow", the British Chambers of Commerce (BCC) believes that the UK will avoid the previously feared double-dip recession. The BCC’s latest quarterly economic survey shows that the manufacturing and services sectors “are now much stronger than during the worst phase of the recent recession”, and there is growing confidence in improving profitability in both sectors. “There has been a welcome improvement in the economic situation,” says the BCC, although it urges the government to “go well beyond the recent Budget” to encourage growth. More… [PDF]
Key contracting sectors to buck the UK insolvencies trend – BDO
The technology, media and telecoms sectors are likely to buck the UK insolvencies trend in 2012, whilst manufacturing should be “comparatively well placed too”, according to the Spring 2012 Industry Watch from BDO. The accountancy firm forecasts a “turbulent two-speed outlook”, with insolvencies to increase marginally this year, following a 6% increase in 2011. The large corporates sector, on which so many contractors rely, is to remain relatively unscathed, with most of this year’s insolvencies likely to be among small and medium enterprises. More… [PDF]
Clients have on the whole not been put off using contractors because of AWR
The new Agency Workers Regulations (AWR) have not wreaked the havoc on the UK’s flexible workforce that many had feared. “The benefits that flexible staffing arrangements provide will continue to outweigh the additional administration and uncertainty that has been created in some sectors,” says Tom Hadley of the Recruitment & Employment Confederation (REC). Reflecting on the first six months of AWR, he feels that, “Recruitment agencies ... have ensured that flexible working options continue to provide a crucial outlet for workers and businesses.” More...
Government’s much-hyped tax simplification could actually be adding complexity
Despite the prime minister, chancellor and business secretary paying lip service to simplifying the tax system, many commentators across the accountancy sector and media doubt their actions are helping matters. Francesca Lagerberg, head of tax at accountants Grant Thornton, summed up wide-spread cynicism after the largest ever post-Budget Finance Bill was published. "As the Office of Tax Simplification battles to streamline the already complex landscape, the government has issued an eye-watering three volumes of legislative bloating...,” she told CFO World, adding that the OTS’s task is “now becoming near impossible”.
HP contractors ‘strong-armed’ into rate cut, in a move that could backfire on the IT giant
Just as many areas of the IT contracting market are beginning to blossom, and other clients are reporting skills shortages, HP Enterprise Security Services has reportedly offered its contractors a “take it or leave next week” offer of a 5% pay cut. A report on Channel Register, which quotes industry and other sources, plus a letter from HP’s recruitment agency, ARM IT, indicate that HP took advantage of contractors’ one-week termination clauses to introduce the ‘contract variation’The move could ultimately backfire on HP, prompting those contractors with skills in increasingly short supply to jump ship at the first opportunity. More…
Contractors to be given the opportunity to ‘fess up’ over tax fraud
Contractors guilty of tax fraud could be offered the opportunity to avoid prosecution and a possible prison sentence in exchange for being completely open with HMRC, reports Accountancy Age. This carrot is being offered as an alternative to the ‘stick’ of the government’s determination to substantially increase prosecutions of suspected tax fraudsters. More…