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.

What should I do if I disagree with my end client’s IR35 determination?

It appears in light of the changes to IR35 due in April 2020 that some major engagers of contractors have already made policy decisions that all off payroll roles will be deemed to be inside IR35. And here it all starts… So what should I do if I disagree with my IR35 Determination?

Public statements indicate that HSBC, Morgan Stanley and M&G Investments, have already decided that this will be the case with their IR35 Determination and no doubt we will see other organisations reviewing their positions very shortly.

So is this “blanket approach” being pushed by the limited timescales before the legislation becomes law so that the clients can reduce financial risks? If that is the case, it is likely to be an attractive proposition.

Many end clients may take this as the easy way out but HMRC have stated that this approach would be frowned upon.

The legislation provides you with an opportunity to appeal the decision to the end client if they determine that the role falls within IR35, but you (and/or your agency) do not believe it should be! This gives you an opportunity to put forward your case, but how this will work in practice is unlikely to be something contractors will feel at ease with.

To make the appeal you are required to make representations on why you believe the decision is wrong. The end client then has 45 days to tell you either:
The original determination is upheld;
Give you a new status determination.

If the end client fails to respond within 45 days, the liability for tax and NIC reverts to them.

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…

Disguised remuneration: tax avoidance using capital advances, joint and mutual share ownership agreements

HMRC have published Spotlight 53; ‘Disguised remuneration: tax avoidance using capital advances, joint and mutual share ownership agreements’.

The aim: to ward off individuals participating in schemes that avoid Income Tax and NIC this time via capital advances and complex offshore joint (or mutual) share ownership arrangements as disguised remuneration.

The contractor becomes an employee of an “umbrella company” or a connected entity, such as an offshore company and signs a Loan or capital advance agreement. Alongside this they also sign a Joint/mutual share ownership agreement.

Any monies received by the contractor are made as two separate payments, with a nominal salary with little or no tax and NIC’s paid. The second payment is a weekly or monthly loans detailed as a ‘capital advance’.

The employer company then undertakes various share transactions involving an offshore joint/mutual share ownership trust. These happen to not provide any financial gain to the employee, but the shares may provide a dividend for the employee.

In Spotlight 53, HMRC says that this is an attempt to ‘dress up’ employment income to purposely avoid PAYE, Income Tax and NIC.

Involvement in one of these types of scheme means the contractor will be liable for taxes and NIC’s on the value of the loans received, interest and penalties. For transactions post 14th September 2016, a General Anti-Abuse Rule (GAAR) penalty of 60% but only where if GAAR applies.

HMRC’s advice to those people is to settle now to avoid a future investigation and increased liabilities.

Spotting these tax avoidance schemes…

Some contractor loan schemes involve giving you some or all of your payment in the form of a loan that you’re not expected to pay back. It’s diverted through a chain of companies, trusts or partnerships and you’ll be told this is to save you tax. The scheme promoter claims there’s very little risk to your investment.

What if HMRC has given it a Scheme Reference Number?

This is where HMRC has identified the arrangement as a potential tax avoidance and are investigating it. Any contractor working via one of these schemes will be been given a Scheme Reference Number (SRN) by the promoter and it must be included it on your tax return. Having an SRN does not mean that HMRC has ‘approved’ the scheme.

MPs and taxpayers on retrospective loan charge payments

Anger is growing among taxpayers facing large demands from HMRC over their loan charge repayments. Following up on a previous Politics Live report into the campaign, reporter John Owen looks at how some people are coping, or not, with paying back the money they are now said to owe.

UK viewers can watch the full programme here for 30 days from transmission.

Excerpt from https://www.bbc.co.uk/news/av/uk-politics-49032605/mps-and-taxpayers-on-retrospective-loan-charge-payments

Taylor Review: Consultation on the establishment of a new single labour market enforcement body in the UK

Since the publication of the 2017 Taylor Review of Modern Employment Practice, The Good Work Plan is back in the news again. The government has launched a consultation to consider the case for a new single labour market enforcement body.

The reasoning behind this consultation on the original Taylor Review is the government’s recognition that “effective enforcement plays a vital role in giving individuals the confidence to challenge employers where they are denied their rights and it creates a level playing field between businesses”.

As with the original report the focus will be on protecting the most vulnerable workers’ employment rights.

Could this be a welcomed change for compliant umbrella companies?

The proposal is that a new single labour market enforcement body would deal with the National Minimum Wage (currently enforced by HMRC); employment agency regulations (currently enforced by the Employment Agency Standard Inspectorate); umbrella companies; licences to supply temporary labour in high risk sectors e.g. agriculture and the fresh food chain (currently enforced by the Gangmasters Labour Abuse Authority); labour and worker exploitation; and holiday pay for vulnerable workers.

The consultation closing date is 6 October 2019. Find out more here.

IR35 & Small Companies Exemption

What is the small company exemption?

In October 2018 the Government confirmed the April 2020 private sector extension of the off-payroll rules with IR35 small companies exemption.

The Budget documentation contained an exclusion for small companies stating they will be exempt. This should minimise administrative burdens for the vast majority of engagers! HMRC have also stated that they will provide support and guidance to those affected by the changes ahead of implementation.

So does the “IR35 small companies exemption” mean?

The Government confirmed that it will use the same criteria contained in the Companies Act 2006.

A business is deemed to be a ‘small’ company if it meets 2 or more of the following criteria over any annual period:
Turnover is no more than £10.2 million
Balance sheet total is no more than 5.1 million
Number of employees are 50 or less

Any contractors engaged by such companies will continue to operate the IR35 rules as they do currently. In this scenario the responsibility for determining their employment status will not pass to their clients.

The Companies Act rules allow for a small subsidiary of a large group to be classified as small – this would get around the rules, allowing large end users to form small, exempt subsidiaries. But HMRC are not stupid are believed to be putting in anti-avoidance rules to counter this.