A series of 30-minute walkouts are scheduled for 10am and 4.30pm today (16/01), but will culminate on January 31^st, self-assessment tax deadline day. The walkouts are at HMRC call centres and enquiry offices and will affect anyone trying to contact these centres. It is likely to cause huge inconvenience for millions of higher-rate taxpayers and those with untaxed income, such as landlords, freelancers and sole traders, who are required to submit a tax return each year.

Reported on Contractor UK, organisers, the Public and Commercial Services union, admit they have chosen to take this action on these specific dates to have maximum impact. They are opposing the planned move towards privatisation.

Speaking about the plans, the union said: “If HMRC believes there are issues to address in its call centres, it should invest in its own staff and in training, instead of handing public money to private companies.”

An HMRC spokesman said: “The project is not about outsourcing or replacing HMRC jobs. It is ultimately about finding ways to improve the service we provide.”

Bob Jones, a former Inland Revenue tax inspector however reassured the contractor not to be afraid of changing accountants but to ensure they chose accountants that were able to fulfil all the necessary requirements.

Speaking on Contractor UK, Mr Jones said;

“HMRC do not publish their risk analysis strategy, but they are generally more interested in the figures in the accounts rather than the firm involved in the production. Remember though that whether local or offline, a professionally qualified accountant has been trained and must adhere to certain standards. If you look for an accountant outside that sphere then, of course, you do need to be careful. HMRC are aware that there are certain tax advisers that should really be doing something else!”

“The bottom line is that changing accountant should not cause a problem provided you go to someone who is reputable and, preferably, qualified.”

Independent Contractor Services (ICS) offer accounting and payroll solutions to the contractor marketplace. Guided by the principles of trust, care and compliance, we specialise in Umbrella, Limited Company and Sole Trader solutions.

Employers who took part in the study reasoned their decision as being anxious about the possible increased cost in having to grant temporary agency workers the same pay, pension and benefits as permanent employees as well as having to accept the cost of having to liaise with agents more closely.

Speaking to Contractor UK, Allen & Overy employment partner Stefan Martin commented on the potential impact of the AWR;

“The advantages of using a flexible workforce during the current economic climate will be compromised as employers feel the burden of additional rules and regulations. While businesses will undoubtedly continue to use agency workers, this will result in increased costs. Rather than strengthening their rights, this may actually make the position of agency workers much more uncertain, exposing them to early termination of contracts.”

Reported on Contractor UK, a labour MP suspects they may propose cutting the maximum allowance, or scrapping the annual inflation-linked increases. He believes the government wants to stem the billions in tax that ISAs deprive the Treasury of each year.

Danny Cox, an investment adviser of Hargreaves Lansdown said that reducing the maximum savings allowance would also have “virtually no impact” on the tax take in the short term, as many investors and savers already have significant sums sheltered in ISAs.

The Investment Management Association (IMA) said the increase to the ISA allowance increased the monthly deposit of new money, on average, each month to £400m. However, research from Fidelity reportedly shows that only one in ten savers has used their full £10,200 allowance (raised from £7,200 previously) hinting that the government may not announce a reduction on the limits.

ICS Money in partnership with Contractor Financials understand a contractors unique working status  can advise any contractors that may wish to set up a tax free ISA.

However, some private sector clients may avoid hiring contractors that have come from the public sector. Contractors who do not have skills specific to the private sector may have to progress cautiously.

Bernie Potton, founder of SQ Computer Personnel; “Government IT contractors whose skills are without an immediate or equivalent fit in the private sector will need to use a ‘stepping stone’ approach, using this method ex-government IT staff can eventually end up working for corporations.”

To successfully move from the public sector to private sector Contractor UK say that contractors need to be able to learn new skills quickly. They offer five top tips for contractors wanting to move from the public to private sector which can be viewed here.

Our Managing Director, John Lyon, speaking on Contractor UK advised the contractor to first check if there was a clause in the original agreement to say that expenses were “time-sensitive.” If no such clause is in place and the contractor has retained all necessary receipts and documentation, the payment should be honoured.

In this contractors case he said a “commercially acceptable” way to proceed would be to contact the client to discuss the issue, but noted that Purchase Orders may need to be obtained from the company before any payments can be made.

He advises contractors not to be afraid of asking for monies that are owed for work they’ve already completed, and moved on from.

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’”.

However, for three months from 19 June to 18 September, HMRC paid Singh £149,500 through his company Orwell Consulting. His three month contract was worth approximately £50,000 per month which was equivalent to his previous annual salary.

HMRC’s accounts read: “For the period 19 June 2009 to 18 September 2009, £149,500 was paid to Orwell Consulting Ltd for the services of Deepak Singh (a director of that company) who held the position of Acting CIO.”

In a statement provided to Contractor UK, a former tax inspector commented: “The circumstances here appear to be a so-called ‘Friday to Monday’ (employee on Friday – limited company supplier on Monday) scenario, which was the main reason for the introduction of IR35 by the tax authority in the first place.”

HMRC is reported as saying it will ensure no tax is avoided as a result of the arrangement.

Powerchex, which issued the figures, said that total contract offers to IT freelancers leapt by a staggering 320% in the four weeks from May, and by 340% against June 2009.

“Fears of a double-dip recession are beginning to dissipate,” says Alexandra Kelly, managing director of Powerchex.

Banks have been said to be driving the growth in IT contract offers even though they are historically the most volatile job sector. The sector, which grew by 45% from May to June, has been recruiting for new IT-enabled projects, signifying optimism for at least the next quarter.

Speaking last month, IT recruiters at staffing firm Jenrick told Contractor UK that client companies in London were prioritising their contract hires. Managing director, Philip Fanthom commented;

“There is a steady demand for IT contractors in London depending on their skill set. What we have witnessed is that the pendulum has swung back from a trend to recruit on a permanent basis, firmly towards recruiting contractors.”

The findings, compiled by Foreign Currency Direct, add that Australia and New Zealand are seen by self-employed Britons, including contractors, as the best destinations to relocate to.

Contracting abroad is a great way to gain new skills, learn to approach projects in different ways, learn a new language and experience the culture of another country.

An international lifestyle magazine, Shelter Offshore, also highlighted the opportunities abroad for UK contractors. They stated that other countries in Europe encourage contracting and recognise the new services and skills to a local environment a contractor can bring.

Rhiannon Davies, co-founder of Shelter Offshore said, “People are right in thinking that they can have a better chance of success if they take their business abroad or start a new business overseas.”

If a contractor has a transferable skill set in IT, engineering or construction there are many opportunities to work with client companies almost anywhere in the world. It is now as easy to identify contracts in Australia, the Middle East or the USA as you would in the UK.

Independent Contractor Services (ICS) are well established in the contractor marketplace. We offer a range of services, including our Umbrella Service, Limited Company Service and Sole Trader Service. We also offer a CIS Service to help contractors that wish to provide services to the construction sector, or that are already working within CIS.