Archive for the ‘Contractors’ Category

There have long been debates and doubts about the role and responsibilities of a professional contractor, particularly in the eyes of HMRC. Now, independent professional membership association Professional Passport has announced plans to produce a formal definition of a professional contractor. This will concentrate on career professionals as opposed to those who come into contracting on a short-term basis, possibly only until they find a permanent post.

The organisation believes such a definition will benefit all involved parties. Contractors could be removed from tax and employment legislation such as IR35, the Agency Workers Directive and income shifting rules. It will enable the government to simplify existing legislation and reduce the need for future legislation while presenting no threat to tax revenue. Agencies and employers should also benefit from reduced bureaucracy and the removal of threats of employment rights actions or tribunals.

The Service Providers Association welcomed the proposals, having previously launched its own code of conduct for businesses in the service providers’ sector. This is designed to encourage best practice in the industry and to demonstrate ethical operating practices so that contractors will know they are dealing with professional organisations.

The proposed definition may clarify contractors’ employment status, which has been called into question by the case of Tilson versus Alstom Transport. The original outcome of this case was that the contractor who brought a case for unfair dismissal was awarded employment rights on the grounds that the contract between the parties was invalid. This decision was subsequently overturned on appeal and the claimant was adjudged to be a contractor rather than an employee.

This case yet again illustrates the sometimes complex relationship between contractors, agencies and employers, emphasising the need to have a proper working structure. Contact UKContracting.net to get your affairs in order.

There have been growing concerns that the Intra-Company Transfers system is being routinely abused. Now the Conservatives, in a policy announcement in the run up to the forthcoming general election, say they will impose a cap on the number of visas if they come into power.

Intra-company transfers were introduced as a means for overseas companies to fill requirements in the UK for high-level skills or company-specific knowledge. It allowed them to bring people in from other countries to meet those needs. However, some overseas companies are reportedly setting up subsidiary companies here simply to take advantage of the UK’s outsourcing market and are bringing in people to fill entry-level and mid-level roles. Around 43% of the near 30,000 intra-company transfer visas allocated last year went to just seven Indian companies and the belief is that they get them just to save on salary costs.

The major gripe is that the Home Office seems unable or unwilling to get a control of the situation. However, the Conservatives say they plan to place a cap on the numbers allowed in although, in typical political style, they won’t commit to a number. It is a policy that is used in America and tends to lead to a stampede for available visas, which are usually snapped up pretty quickly.

This does raise some doubts as to if the proposal will actually turn into anything and, if it does, how it will work. Nevertheless, if some control is imposed on the availability of intra-company transfers, this may open up further opportunities for UK contactors.

Popular opinion has long been that there’s a love-hate relationship between contractors and agencies, which probably varies with need. However, new research from online recruitment marketplace TalentPuzzle suggests that agencies aren’t that popular with employers either.

There is an acceptance that agencies have a useful role to play, especially since they help to fill specialist positions and often provide better candidates than would otherwise be obtained. However, there is obvious frustration that the briefing of agencies on requirements often appears to serve no useful purpose. Despite outlining what is needed, CVs are often submitted from unsuitable candidates and the capabilities of applicants are frequently overstated. Agencies that pester for feedback on candidates and CVs are also a source of annoyance.

Unsurprisingly, the fees charged by agencies are a considerable bone of contention. Not only are they thought to be excessive in many cases but there is a strong feeling that rates need to be more consistent across the different agencies. The situation isn’t helped by a perceived lack of transparency, which can leave employers with the feeling that they are paying more than they need to do for a particular candidate.

By working more closely with employers and being more open about their rates and methods, agencies can provide a service that is not only better but, more importantly, is seen to be better. An improved service at a price that is accepted as fair will lead to a better working relationship and more business in the long term.

There were no signs of dancing in the streets last week or of any other outpourings of joy to greet the UK’s long awaited move out of recession. This is hardly surprising given that the country rather limped into positive territory. Indeed, there is speculation that the 0.1% reported growth in the last quarter of 2009 could be wiped out by later corrections to the figures, meaning we might actually still be firmly in the mire.

With UK output having fallen by around 6% overall, the recession was not as bad as some had forecast but was nevertheless worse than the previous two the country has experienced. However, the 0.1% pick up was far less than the 0.4% growth that was widely expected. This means that there is now only one more set of quarterly output figures due to be published before the latest date for a general election. The government, therefore, will be hoping for a better result then in the expectation that this might give its flagging poll showing a boost.

The Chartered Institute of Personnel and Development, however, doesn’t altogether believe the official figures and reckons the recession was much worse than has been reported. It estimates that 1.1 million people lost their jobs and around two thirds of them got other employment paying over one quarter less. The Confederation for British Industry believes that significant growth is needed before there will be any real improvement in the employment figures. The private sector will have to create many job opportunities simply to offset the expected cuts in public sector jobs.

Reassuringly, while public sector IT spend is certain to fall, demand for IT staff is continuing to grow in the private sector, with finance leading the way. Contractors can therefore look forward with some confidence to better times in the market, with the next recession hopefully many years away.

Make sure you’re ready for increased activity by getting your business affairs in order. Contact UKContracting.net for the best advice.

The recent High Court decision that HMRC is entitled to levy taxes retrospectively has come as a great shock to many IT contractors. It is estimated that £100 million may now be recovered from UK taxpayers with around 2,000 IT contractors being affected.

The case goes back to the 2008 Budget, when the resulting Finance Act sought to close a loophole that allowed UK taxpayers to channel their income into an Isle of Man trust fund in order to avoid tax and national insurance payments. The issue in dispute was HMRC’s intention to make the legislation retrospective, backdating it to 1987 when the double taxation treaty with the Isle of Man came into effect. However, assessments where there is no fraud or negligence are capped at six years, so the effect is more limited.

The offshore scheme was run by Montpelier and HMRC’s plans were challenged in the High Court by one of its clients. The allegation was that, since his tax affairs were deemed legal until 2008, the retrospective change breached his human rights.

Throwing out the challenge, Mr. Justice Parker ruled that HMRC had acted properly, stating that the scheme had no genuine commercial purpose and was set up purely to avoid income tax. He also expressed the opinion that a contractor with an artificially lowered tax rate had an unfair competitive advantage.

Accepting that no action had been taken against the scheme for many years, Mr. Justice Parker pointed out that HMRC had insisted that the arrangement did not work and had advised the payment of amounts due. Nevertheless, there is widespread concern at the unprecedented ruling to allow retrospective legislation going back over such a long period, which may well open the way for similar legislation in future. The fear is that taxpayers may no longer be able to rely on existing arrangements and the certainty of the law as it currently stands.

Many contractors are now faced with being unable to meet tax demands and penalty charges. An appeal against the ruling has been promised although, since Mr. Justice Parker refused an appeal, permission will need to be sought from the Court of Appeal.

The judgment does emphasise the need to receive proper professional advice to ensure you meet all your business obligations. Contact UKContracting.net to ensure everything is in order.

IT has never been about learning a skill and then generally sticking with it for a large part of your career. If you plan to do that, pretty soon you won’t have a career because you’ll be left behind with outdated skills. The IT business changes faster than most and so you need to learn up-to-date skills to keep you employable. Knowing the ones that are really going to be in demand means you can gear yourself up for the best paid jobs.

Communications is a big issue, with many companies moving towards phone systems based on VoIP rather than the traditional PSTN technology. At the same time, various communication methods are becoming more unified, with users expecting to access everything (email, text messaging, voice mail and so on) through a single interface and from various devices such as laptops, PDAs and smartphones. All this makes networks more complex, so skills to manage them and implement the various services will be increasingly in demand.

Networks are also getting more complex for other reasons, often having to support PCs running under Windows as well as various versions of Linux, with Macs often thrown into the mix. Added to this is a tendency for employees to work at least a part of their time at home and an increasing need to access company systems remotely. Not only that, but access is by a variety of devices as well as from different locations.

All these developments will require skills in supporting mobile users on different platforms, configuring mail servers and implementing wireless networks. This increased access puts much more emphasis on security aspects, with the need to authenticate users and prevent access by those who don’t have sufficient security measures to meet minimum criteria. A thorough knowledge of VPN technologies, authentication methods and the security implications of various devices will be in demand.

Software as a Service is something that’s been hovering around for some time and is likely to grow. If applications are accessed remotely rather than being installed on the users’ own machines, this may move job opportunities away from the user sites and more towards application providers. The likely increase of large data centres will require changed skills, with the need to support multiple customers and plan resources. This may also lead to a rise in virtualisation to make best use of servers at the centres.

Being aware of what’s happening and keeping your skills up-to-date will improve your job prospects. Contacting UKContracting.net to sort out the way you’re organised will also increase your business efficiency.

IT contractors, like many professionals, understandably seek to limit the amount of tax and national insurance they pay. One popular way has been to channel income into a trust fund based in a low tax country, with the income earner retaining ownership of the money through their position as a trust beneficiary.

This type of scheme has continued for several years with no intervention from HMRC. However, in March 2008, it sought to close a loophole in the UK’s double taxation treaty with the Isle of Man. The main shock that came out from the announcement was the controversial decision to backdate this clampdown to 1987, the year when the treaty came into force.

The decision caused near panic amongst those affected in the knowledge they could be forced to pay large sums in backdated tax and national insurance contributions plus interest charges on those amounts. There were, understandably, fears of bankruptcy, repossession and relationship problems resulting from the decision. It led to the Parliamentary Joint Committee on Human Rights criticising the retrospective legislation.

Representation was made to the Royal Courts of Justice, which undertook a judicial review into whether HMRC acted lawfully in backdating the legislation. Whichever way the ruling goes, it is likely to be appealed to the Supreme Court by the losing party. After all, it is not something that can be ignored, with IT contractors set to lose large amounts of money if the decision goes against them. More worryingly, it can open the way for HMRC to apply for more retrospective legislation in future.

This case emphasises the need to make sure you’ve got your business affairs sorted out correctly. Contact UKContracting.net for the best advice.

After several months of consultation with industry representatives, the government finally laid before parliament the regulations to implement in the UK the EU Agency Workers Directive. The timing is to make good the government’s pledge to get the regulations on the statute books during the current session of parliament. However, they do not come into force until October 2011, which will supposedly give all those affected the time to make preparations.

The Agency Workers Directive aims to protect temporary workers, who are deemed to be ‘vulnerable’, by granting them the same rights as full-time employees after they have worked for a company for twelve weeks. The consultation period has predictably seen the trades unions push for full protection while industry representatives have been arguing for light regulations. Although the latter generally welcome the delay in implementation, they are concerned that they have been unable to comment on the final regulations, which are considered to have many inconsistencies.

In particular, those who are classed as ‘genuinely self-employed’ are to be excluded from the regulations. This applies to those with limited companies but not contractors who operate through an umbrella company. Agencies do, understandably, welcome the decision not to impose restrictions on agency fees that are thought to be unreasonable. There is also the question of who will stand the £1 billion a year estimated cost of the regulations, with the suspicion that it is the contractors themselves who will ultimately be hit.

Industry representatives now seem prepared to wait and see the detail of the regulations before coming to any firm conclusions. They also appear intent on seeking clarification of points that concern them and working with the government on the guidance documents that determine how the requirements will be interpreted. However, these things tend to be difficult to stop or divert once they’re set in motion and even a change of government may make no difference.

Contact UKContracting.net to make sure you’ve got the most suitable working arrangement and limit any harmful effect of the Directive.

The latest of a long line of initiatives to reduce the underpayment of tax is the Tax Health Plan, which is aimed at the medical sector. Medical professionals are being given until 31st March 2010 to register their intent to voluntarily disclose underpaid tax. Providing they then make full disclosure by 30th June, they will incur a reduced penalty of 10% rather than a possible 100% rate and criminal prosecution. Those failing to register are threatened with targeted investigation. Should the approach yield satisfactory results, it is likely to be extended to other professions, so IT contractors need to watch out.

At almost the same time, HMRC confirmed it is to close 130 offices with the loss of 1,700 jobs. This is part of its plan to cut 25,000 jobs and close more than 200 offices by 2011. The moves call into question HMRC’s ability to clamp down further, especially given reports that the amount of uncollected tax is increasing and that there is over £130 billion of uncollected, avoided and evaded tax.

The cuts may make worse the 44 million calls to HMRC that the National Audit Office reports went unanswered in 2008-9. This represents 43% of the total calls received, a figure that rose to 67% at peak periods. Performance is reported to have improved in 2009-10, although more than one quarter of calls still go unanswered against a benchmark of 10% in the private sector. HMRC’s 31 contact centres have the equivalent of 10,500 full-time staff costing £233 million annually.

Avoid possible problems and the need to call HMRC by contacting UKContracting.net to get your business on a sound footing.

When times are hard and work is in short supply, you need to give yourself the best chance of picking up new contracts. But there is growing evidence that employers are delving deeper into applicants’ backgrounds before taking them on. So you need to be sure that you’re as squeaky clean as you can be to avoid unexpected problems getting in the way.

The background screening industry has grown tremendously, enabling more companies to screen job candidates. Most will justify this by saying that it reduces the risks to their organisation or ensures a safer workplace. However, there is a belief that it is largely a means to thin out a long list of applicants, getting rid of those with a criminal record or a bad credit history on the grounds that these affect behaviour and performance.

If criminal charges have been brought against you in the past, it’s something you can’t really avoid. But if this occurred many years ago and was relatively minor, it’s maybe best to come clean on your job application — you might be able to dismiss it as youthful foolishness. Assaulting a project manager on a previous contract might be more difficult to explain away, so resist the temptation should it arise. As far as credit history goes, most people aren’t even aware of any problems. It’s worth paying a small fee to get a copy of your credit report and see what’s lurking there. You may be able to take corrective action but, if not, at least you’ll know the situation.

An area you can do something about is any entries you have on social networking sites. This is somewhere that an employer can check easily and many are doing so. Rejection may result if your entries contain lots of negative comments or derogatory remarks, if the information conflicts with that shown on your job application or you demonstrate poor communication skills.

It’s essential that you clean up your entries so that they appear professional, positive and highlight your good points and accomplishments. Also try to remove any negative comments made against you. Good and consistent social networking entries can increase your chances of getting that next contract. You’ll also be in better shape if your business is properly organised, so contact UKContracting.net for the best advice.