Category: Umbrella Company

JustSwitch Announcement!

Announcement from Just Accounts; software provider to the contract market.

It feels like we have been waiting for ages to share this with you, but we can finally announce that we have a new feature coming called JustSwitch!

With the dreaded IR35 coming into effect in the private sector, many contractors will experience the need to change the nature of their contracts, leaving their limited companies for umbrella. 

This will impact the way contractor accountants manage their clients and work for them, resulting in lengthy processes to swap contractors from limited to umbrella, and vice versa.

This is where JustAccounts will have your back!

JustSwitch will make our clients’ experience a piece of cake, streamlining the switch process and eliminating the contractors’ worries around being set on a ‘permanent’ solution.

How does it work?

JustSwitch is a new feature within JustAccounts that will allow you to switch your contractors from Limited to Umbrella and vice versa, without ever having to leave the software, or create long excel spreadsheets that need to be imported.

Even once you have changed to Limited or Umbrella, or Umbrella to Limited, if or when you need, you can still switch right back at any time, so it isn’t permanent and can be changed as easy as making that morning coffee!

JustAccounts are happy to say we are the only software provider to support the automated movement between Limited to Umbrella and back again an unlimited amount of times.

There will be a brand new JustSwitch dashboard, where you can easily view graphs and other data, including an overview of how many employees have been switched, and how many are ready to be switched, so you’re in the know at any time.

If you would like to hear more about this feature and how it works with the system, call us on 01942 721 397 or email info@justaccounts.com.

Integro Accounting offer new Easy Switch package to contractors caught by IR35.

UK contractor accountancy specialists, Integro Accounting, launch new ‘Easy Switch’ accountancy and payroll solution. In their 2019 contractor market survey, over ¾ of clients claimed to be working in the private sector. With the pending IR35 changes, Integro Accounting have partnered with leading umbrella company experts Clarity Umbrella.

Easy Switch will allow contractors the opportunity to work through their own Limited company whilst using their recommended umbrella company solution to suit their latest contract.

CEO of Integro Accounting, Christian Hickmott, comments:

“No one can say for certain what the future holds regarding IR35. We believe the market will change come April, mostly due to HMRC forging ahead with their plans for the private sector. Will things change back, who’s to say. We don’t want any of our clients to suffer financially due to HMRC making hasty decisions in uncertain times; which is why we’ve developed the best solution for our clients and their peers easing the decision of Limited or Umbrella, close or continue, inside or outside.”

Making the decision to partner with a payroll company rather than start a new division within Integro Accounting, Christian stated: “Choosing to partner with Clarity Umbrella was an easy decision. Lucy Smith, who previously led Contractor Umbrella, has a wealth of knowledge and is a formidable force that holds the same integrity that we value in our company. We let the experts remain the experts, so we can specialise on what we do for our clients.”

For more information visit: Easy Switch accountancy and payroll package.

NHS Locum challenges IR35 status

An NHS locum is to challenge an IR35 tax tribunal judgment at the Upper Tribunal (UT) in a case which could set a beneficial precedent for other healthcare locums affected by IR35 and the Off-Payroll rules.

In July 2019 consultant urologist George Mantides had landed a split decision in the courtroom when appealing tax bills imposed by HMRC. This was in relation to two engagements he had undertaken in 2013, this was after the taxman had concluded that he was caught by IR35.

Mr Mantides successfully overturned his IR35 status for one of the contracts even though he chose no legal representation at the First Tier Tribunal. Now, backed by the Independent Health Professionals’ Association (IHPA), he is looking to appeal against not only the second engagement, but what he refers to as “the unfair false employment of myself and other healthcare professionals”.

Following the introduction of the Off-Payroll rules to the public sector, the employment status of many public sector workers has been a bone of contention, so it will be interesting to see how the case pans out, and whether this will help set any precendents for the IR35 Private Sector role out.

Government consults on regulation of umbrella companies.

The Government is now consulting based on recommendations in the Good Work Plan to establsh a new single enforcement body for employment rights. This consultation will also look at the possibility of one single enforcement body that will inevitably look at the regulation of umbrella companies.

The consultation will consider the creation of a new single enforcement body responsible for enforcing employment rights which will include the regulation of umbrella companies. This type of arrangement has worked in other countries and the Government will now look to see if similar measures can be applied in the UK.

The proposal is that the new body would combine the responsibilities that currently sit under the Director of Labour Market Enforcement’s remit. This includes the enforcement of national minimum wage currently carried out by the HMRC, domestic regulations relating to employment agencies, licenses to supply temporary labour in high risk sectors, and labour exploitation and modern slavery related to worker exploitation.

The consultation also suggests that the department will have new responsibilities in relation to umbrella companies and holiday pay for vulnerable workers.

The government aims to deliver on the following:
Extended enforcement particularly in the areas of umbrella companies and holiday pay, which are not currently enforced;
A strong, recognisable brand making it easier for individuals to know where to go for help;
Better support for businesses through development of guidance;
Coordinated and consistent enforcement action;
Greater sharing of intelligence, and;
Closer working with other enforcement partners.

The Government are asking for feedback on the consultation with views being sought on whether the new body should include responsibilities in relation to statutory sick pay breaches, the Equality and Human Rights Commission in relation to discrimination and harassment and BEIS in relation to the enforcement of employment tribunal awards.

The consultation closes on 6 October 2019.

Will changes to IR35 see Umbrella Company usage soar?

It appears as we move towards the April 2020 IR35 Private Sector changes that many recruiters anticipate umbrella company usage to soar ahead of the implementation.

The research comes from a survey ran by the Association of Professional Staffing Companies (APSCo). The results showed that 91% of agencies polled believe that an increasing number of contractors will shun personal service companies (PSCs) and turn to umbrella companies due to the new rules that come into effect next April causing umbrella company usage to soar.

When the same group were asked if they expect most of their contractors to agree to working ‘inside’ IR35 after the changes come into effect, two thirds (67%) said ‘no’.

So with only 8 months left before the changes are brought into force, could we see a rise in umbrella companies? Could we see other schemes appear that will no doubt leave contractors in trouble under the Loan Charge scheme?

The simple answer is yes! Umbrella companies will appear and some companies will suggest they have found loopholes in the legislation which will benefit the contractor. But we all know that it would be more beneficial for HMRC to see as many people under employment taxes as is feasible. More monies and less work! But fundamentally the changes simply place the onus on the end client to make the decision of the IR35 status, so if you are able to prove to the client that your working practices place you outside IR35 then there shouldn’t be a problem – surely? However, if we look at the Public Sector changes then we can place a good guess that many companies will opt for blanket decisions.

HMRC have stated that they will frown on blanket decisions, but whether this will be the case who know’s. Do they have any incentive to investigate when the coffers are being lined with full employment taxes? We shall see…

Umbrella trade body urges government for tax system reform instead of ‘sticking plaster’ approach

With the Autumn Budget having been announced by Chancellor of the Exchequer, Philip Hammond, PRISM has called out for the government to stop and think about extending IR35 rules.

With the Autumn Budget set to take place 22nd November, the non-profit making trade body for umbrella companies, PRISM has urged the government to think over any plans to extend IR35 rules to the private sector – a rumour that has been going around for a while now. Crawford Temple, CEO of PRISM, explained, “The IR35 legislation, as it stands, contains incentives and protections for both recruiters and workers to seek out providers who offer high-return but non-compliant solutions.

Since its introduction, we have seen an increase in non-compliant offerings, with many able to fold when approached by HMRC. “The regulation in its current form means it is highly unlikely that HMRC will be able to collect any taxes due from the non-compliant providers, and therefore, the anticipated tax gains will be significantly reduced.

Temple added, “Extending these rules to the private sector will exacerbate the problem and will not deliver the expected HMRC returns. The long-term answer is a structural reform of the tax system rather than a sticking plaster approach of tweaking rules.”

Engaging NON-UK Workers to work in the UK through a NON UK Company.

We recently gave advice to a UK Agency engaging a non UK worker to work in the UK through their own non UK Limited Company. Our advice had been that PAYE and NI need to be deducted on the basis that the OEI (Offshore) applied, but they received contradictory advice from their trade association. They sought clarification from HMRC who confirmed that we had been correct.

Question to HMRC.
“Dear Sirs In connection with the recently introduced intermediaries legislation and reporting, please can you guide us as to reporting requirements IF we contracted with a EU contractor who has his / her own Ltd Liability Company (PSC) in the EU country of residence but was placed for a short period (say 3 months) to a UK client and performed the duties on site, likewise if they performed duties remotely. What category would this be or should the contractors company be subjected to UK income tax / NI Thanks in advance”

HMRC Response.
Dear Sir, The contractor and their employer should apply to his/ her own Social Security scheme for a form A1 to exempt them from UK National Insurance and to continue to pay social security in their home scheme. They should present a copy of this form to any agency/ intermediary such as your business between the overseas employer and the client – or a NIC liability arises for that agency. Any agency/ intermediary such as your business between the overseas employer and the client must operate PAYE tax here in the UK and withhold tax from the worker in the UK.

I recommend: https://www.gov.uk/new-employee-coming-to-work-from-abroad The requirement is for the UK intermediary to put the person on the UK RTI scheme and deduct tax – not for an intermediary reporting information return. I trust this helps HMRC Personal Tax Product & Process (Employment Status Policy) Room 1E/10 100 Parliament Street London SW1 2BQ Conclusion If you are paying workers to work in the United Kingdom through a business based outside the United Kingdom then you must account for Income Tax through the UK PAYE system.

The agency must also account to the UK Tax Authorities (HMRC) for Employers and Employees National Insurance, unless an A1 certificate is held by the agency issued by the competent authority in the home country in which the worker is habitually resident. Unfortunately, ignorance is no defence and as the legislation was enacted on 6 April 2014 then we are already over twelve months in to the new regime.

Article provided by Paul Hughes from iPaye Ltd.

Standing up for compliance

Over the last decade there has been an influx of short fixed term contracts. This is highly indicative of the UK’s reliance on a fluid, broadbased and flexible temporary workforce, and this is predicted to continue. This trend has attracted some less than scrupulous providers to enter the umbrella market with, let’s just say, some fantastic offers. This has had the disappointing effect of all Umbrella companies being tarred with the same brush and perceived as unscrupulous, thereby devaluing respectable, compliant providers.

Now is the time to stand together and show the sceptics and the Government what a great job we, as legitimate Umbrella companies, do for this country’s temporary workforce, recruitment industry and economy. For years we have seen chancers shouting from their roof tops about how much a contractor will take home with bogus tax calculations and equally fictional expense allocation.

The question is what have HMRC done about these particular companies? I suspect very little; so the flybynights come and go, all the while eroding the reputations of the compliant hardworking Umbrella companies. Compliant umbrella companies are to the advantage of all parties the contractors, the agencies and not least HMRC, who benefit from a central tax collection point. Contractors need to be assured that the Umbrella company employing them is compliant so they are not being placed at risk. Agencies need to make sure the suppliers on their PSL are compliant and that best practice is being adhered to. It is our opinion that it would be in everyone’s interest for questionable companies in our sector to be investigated quickly. This would discourage the potential rogue element, leaving only genuine Umbrella businesses to meet the demands of the market.

By Paul Young, Operations Manager, Sombrilla Ltd.

What is an Over-Arching Contract of Employment and why does an umbrella company need one?

Travel expenses are only payable if you are travelling to a temporary workplace. This is defined by HMRC as: “A workplace is a temporary workplace if an employee goes there only to perform a task of limited duration or for a temporary purpose. So even where an employee attends a workplace regularly, it will be a temporary workplace and so not a permanent workplace, if the employee attends for the purpose of performing a task of limited duration or other temporary purpose.”

As a contractor you will work on different assignments in different locations for a limited duration in each case but in order for HMRC requirements to be met they will need to be linked under a single employment.

The Umbrella Company is your employer and you will work, as a permanent employee, under an overarching Contract of Employment. However, if you intend only to work on a single assignment whilst in your employment with the umbrella company then your workplace automatically becomes permanent and the cost of travel is therefore not an allowable expense.

Expense claims for travel are also subject to the ’24 month rule’ which prevents a workplace from being a temporary workplace where an employee attends it in the course of a period of continuous work that lasts, or is likely to last, more than 24 months.

Umbrella company named and shamed by HMRC as deliberate tax defaulter.

£16m black hole as payroll parasite David Allen calls in the liquidators.

A massive payroll firm that The Mirror exposed for its rampant tax dodging has gone bust owing £18million.

Among the victims of the collapse of Legitas Group could be the low-paid agency workers it claimed to help. We’ve also found a £16million black hole in the accounts of a sister firm, Work Legal E, which was blamed on ­”embezzlement” by two shadow directors. These two companies, which were run by struck-off solicitor David Allen, operated a controversial tax avoidance scheme which HM Revenue & Customs has called unlawful.

Read the original article at: http://blogs.mirror.co.uk/investigations/2013/05/16m-black-hole-as-payroll-para.html

HMRC issue details of deliberate tax defaulters at https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/402448/150202_deliberate_defaulters.pdf