Independent Contractor Services Blog

The Office of National Statistics (ONS) have said they are pleased that the UK economy has grown more than first thought.

The economy grew by 1.2% in the second quarter of 2010. That was the fastest rate of quarterly expansion recorded since the first three months of 2001.The ONS predicted growth would be 1.1%. They attribute this growth to a strong performance in the construction sector; output grew by 8.5% in the second quarter, up from a previous estimate of 6.6%.

Within the services sector, business services and finance posted a rise of 1.5%, revised up from 1.3%.

Reported by the BBC, a spokesman for the Treasury said: “While the government is cautiously optimistic about the path for the economy, the job is not yet done.

“The priority remains to implement the Budget policies which support economic rebalancing and help ensure the sustained growth that the Office for Budget Responsibility forecast this year and next.”

Graeme Leach, chief economist at the Institute of Directors warned that the strong pace of growth would not last.

“Today’s figures are obviously good news, but we shouldn’t get carried away. Instead of looking in the rear view mirror at what has passed, it would be wiser for us to keep our eyes on the road ahead. We don’t expect this level of growth to be sustained through the second half of 2010.

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Contractors and freelancers should stay organised by keeping to-do lists and prioritising tasks according to Doreen Martel; an independent contractor herself who has many years experience working within the marketplace.

Writing for Helium, Doreen observed that a careful approach to planning the completion of tasks can pay dividends. She said: “Freelancers who maintain a carefully thought out to-do list will find greater success freelancing and tend to be more productive.”

She advises contractors to get the most difficult tasks done first as it can lead to increased productivity on a daily basis. By planning a day’s priorities each morning, you can gauge how deadlines can be met most efficiently.

To-do lists no longer have to be written on a notepad or added as a task to Outlook, increasingly there are online resources to create to-do lists.  Gotta-Do is a free online to-do list app which is accessible anywhere.

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Contractors working via their own limited company have been advised by the PCG to ensure they are not caught under the IR35 legislation and ensure all new contracts are reviewed by an IR35 expert. This warning has come as the PCG have noticed that HMRC appear to be adopting a more devious approach to tax enquiries.

Reported on Contract Eye, tax advisers from the PCG have seen HMRC approaching members by sending them a letter, giving them a telephone call or even arranging an informal meeting, rather than issuing a formal notice of dispute when looking into a contractor’s tax affairs.

One contractor had even received a letter concerning his IR35 status after he met with HMRC to discuss VAT. Nothing regarding contracts or working arrangements was said to have been discussed at the meeting.

The PCG advise contractors who have been approached by HMRC to seek professional advice from the PCG or their accountant before responding. Contractors are not legally obliged to meet a tax officer in person – even for an informal meeting.

Contractor UK added that despite IR35 facing a review, “contractors should keep ‘vigilant’ because HMRC appears to be pushing for meetings with an ‘ulterior motive’”.

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A recent survey by the PCG asked their members whether they thought Linked In was a vital tool for the modern freelancer; this made us think about how relevant social networking is to modern contractors.

Linked In certainly appears to be one of the best social networking sites that has helped contractors not only source new roles but also build and develop their network. Some contractors have been approached by recruiters for roles via their Linked In page and some have even been contacted by the client directly.

Of 173 that voted on the PCG website, over half believe Linked In is a vital tool for the modern freelancer. You can cast your vote here.

Twitter also bears some relevance for contractors. It can help a contractor showcase their skills, show off their personality and also help them source available contracts as well as discuss the marketplace with other contractors.

Many recruitment companies and some clients will post their vacancies via their Twitter account. By simply searching a keyword such as ‘short term contract’, a contractor could see a list of Tweets with that keyword in it and see if they have any relevance to them.

A company may also use Twitter to ask a specific question which you may be able to answer and by interacting with companies, you may find yourself securing your next contract.

We would love to know your views and comments on social networking so please share your experiences using the comment box.

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Contractors working via their own limited company may be interested to know that HMRC recently lost their case against a couple who it claimed owed nearly £20,000 tax on four years’ dividends.

HM Revenue and Customs took the Patmores to court under s660a of the Income and Corporation Taxes Act 1988 but Barbara Mosedale, the tribunal judge, decided that when Mr Patmore paid dividends to his wife this was not an s660a settlement.

Although this may not affect the typical contractor, Kate Cottrell, co-founder of Bauer & Cottrell said, the ‘message’ from HMRC is that they are “still considering and trying to apply the Settlements legislation (s660A) despite their defeat in the Arctic Systems case.”

“We must not forget that it is still open to HMRC to simply change the law where the law does not adequately deal with perceived tax advantages.”

The judge noted that the accountant had set up the company structure in a tax efficient way but this was not a significant factor in the case.

Contractor UK reported that according to HMRC’s Counsel, those tax advantages were reaped by Mr Patmore between 1999 and 2003 and were valued at a total of almost £20,000, based on the five assessments they issued against him. HMRC said he owed this sum because it reflected dividend income from created shares, which although received by his wife and taxed at her lower rate, should have been taxable at his higher rate.

Kate Cottrell sums up by saying “With the recent creation of the new Office of Tax Simplification, Section 660 could now be back in the spotlight as part of the Small Business Tax Simplification Review. Contractors who have entered into such arrangements should remain vigilant.”

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National Freelancers Day, which is organised by the PCG are announcing preparations to celebrate the day on 23^rd November, 2010. In its second year, the PCG wants National Freelancers Day to highlight the benefits of freelancing and the difference it can make to the UK economy.

There will be a series of events throughout Britain to celebrate National Freelancers Day. One of the first events announced by the PCG is a freelance lecture in London, supported by the Telegraph Media Group.

Dr James Bellini, a leading business analyst and futurologist will discuss the role the freelance community should play in the economic future of the UK and how this budding sector can negotiate the financial downturn and emerge better equipped to face the future. Following the lecture, Dr Bellini will face a question and answer section alongside a panel of leading business leaders.

MD of the PCG, John Brazier, said:

“What better way to contribute to National Freelancers Day on 23rd November than to stimulate debate about the future of freelancing and freelancers. It will be exciting to have James Bellini’s vision of what lies before us.”

Independent Contractor Services fully support this day and if any contractors would like to attend the lecture, or to find out more about the day, visit the dedicated website at nationalfreelancersday.org.uk.

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In a survey of small businesses in the UK, research found that nearly two-thirds of the small businesses questioned said they planned to increase their spending on IT this year.

38% said they were planning to increase their use of IT contractors over the next two years, compared to 18% who said they intend to hire permanent staff.

Those with PHP skills are most in demand by small businesses and are closely followed by those with SEO and link building knowledge. IT Contractors proficient in WordPress, iPhone apps, MySQL, and HTML development are increasingly being demanded also.

Reported on Silicon.com, over 75% of the businesses surveyed said they currently use freelancers for IT and web development projects. 57% of respondents said they do so because it is a simple way of finding specialised skills. 20% per cent said they use freelancers when there is too much work on for the in-house team to manage.

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When the UK economy fell into recession, contractors in the construction sector were one of the first to suffer and even now as the economy emerges from recession, a report has detailed that they are likely to continue to struggle to source suitable roles.

The latest Construction Trade Survey published 9th August 2010 has shown a reduction in work for civil and building contractors during the first six months of the year. This, combined with public sector spending cuts has signified a further reduction in available contracts this year.

Noble Francis, economics director of the Construction Products Association said:

“Over the next few years, construction is braced for a fall in public sector investment and will increasingly need to look to the private sector for growth.”

Those contractors luckily enough to secure a contract may find that the contract is shorter than it once would have been and rates are likely to have been reduced.

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Over 2,000 commercial divers are needed to meet the demands of the European offshore wind sector, with 500 likely to be required mainly in the UK and Germany during the installation phase according to a report released this week from The Underwater Centre.

The study, which was carried out by energy analysts Douglas Westwood, commissioned by subsea training provider, The Underwater Centre in Fort William, said that more than 2,200 commercial divers will be needed to help build and develop the sector as it “rapidly expands”.   The Underwater Centre said the findings of the report ‘underlines the integral role that commercial divers will play in the offshore wind farm sector.’

British subsea industry body Subsea UK claims it highlights the growing need for skills right across the energy industry.

Subsea UK chief executive, Alistair Birnie, commented: “There is a growing and urgent need for skills right across the energy industry which this report clearly underlines. We cannot rely on our existing pool of resources to support the massive growth rate and the only way we will succeed is if we invest in the right skills at the right time.

“This report highlights divers as being one of the pressure areas which also includes skills such as engineers and technicians. Attracting new blood into the industry, combined with the energy industry working together to consolidate existing resources, is essential if we are to address the demand for skills now and in the future.”

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The governor of the Bank of England, Mervyn King, has warned that the UK economy faces a “choppy recovery” over the next two years. His comments came as the Bank lowered its economic growth forecast and said inflation would stay higher for longer than previously forecast.

They suggested numerous reasons for this but highlighted that a lack of bank lending would greatly limit economic growth. “It will take many years before bank balance sheets and fiscal positions return to anything like normal,” said Mr King.

The Bank said the key issue behind its prediction that inflation would remain higher than previously forecast was the government’s decision to raise VAT to 20% from 17.5% at the start of next year.

Hugh Pym, BBC chief economics correspondent commented that the Bank’s warning that the UK faces a difficult economic recovery could increase fears of a double dip recession. However, the Bank’s own projections say this remains highly unlikely.

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