You are browsing the archive for 2007 December.

Expenses – Buyer Beware

December 17, 2007 in Business Expenses, Industry comment

There has been quite a bit of noise and “information” flying around on various Contractor forums recently. Mostly this has related to the age-old subject of “dispensations” and how “new” providers are incorrectly using these. For the record, a dispensation is simply a facility for the employer (Umbrella) to reduce administration of expense claims from the employee (Contractor). It does not provide a mechanism for a Contractor to over claim expenses (set limits within the dispensation document) that are not actually being incurred. Perhaps we should consider some of the reasons why an Umbrella might do this…

Some of the ex Composite providers (MSC) that are now operating as a PAYE Umbrella are now facing diminished profitability and I suggest this may the over arching reason for taking some chances (with Contractors I might add!). The economies of scale and income streams they previously enjoyed have been drastically reduced following the MSC legislation. Profit from interest on corporation tax will have been hit along and new costs introduced from either changing into “accountants” or becoming an Umbrella company. Therefore they have to replace that profit with increased volumes and one way to do that is to appeal to the Contractors pocket.

Genuine business expenses are of course perfectly legitimate but the liability for claiming to set limits without receipts, and for expenses that were not incurred, is with the Contractor. Just make sure that when you receive a quote from an Umbrella it is not hiding expenses that you simply can’t claim for.

Companies promoting this type of stance do the industry and Contractors no favours. It simply suggests that legislation will be required and that will only harm Contractors and the genuine businesses that exist to help Contractors work effectively, safely and with no hassle.

Buyer Beware!

Resident Evil: The Umbrella Chronicles

December 14, 2007 in Industry comment

Imagine my disappointment when it turned out that Capcom had not based the storyline for this version of the popular game on Parasol. I had high hopes of Contractors being able to shoot up zombie versions of Parasol staff! It turns out that the mythical “Umbrella Corporation” have a “Red Queen Supercomputer” – I have put a call in to help us with busy Friday month ends. Seems Nintendo could do with some of that power too, more Wii’s are needed before the nation’s children (cough… men) become disappointed this Christmas. Great marketing and innovation success, for Nintendo to outsell Microsoft and Sony as they have a great David v Goliath story. There again, I still have a Dreamcast so what do I know!

Turning to social networking – seems up to 65% of US employers are now “Googling” prospective employees and checking Facebook and other sites for incriminating evidence. I saw some stats the other week on Internet trends and Facebook was off the scale in terms of growth. I think it is only a matter of time before UK employers and recruiters make these types of check as a standard part of the process. So… be careful when posting that picture from the 2007 Christmas “do”. It is also possible that Facebook, MySpace and others could equally become sites where social interaction promotes jobs and roles. Have you seen our ad on Facebook?

The Golden Rules (of Engagement)

December 1, 2007 in Business Expenses, Industry comment, Tax

My name is Rob Crossland and I’m the MD of Parasol, prior to that I worked as a Contractor in the IT and Finance sectors. I hope you might enjoy and contribute to my musings on contracting, employment, sport and tax!

Since the Managed Service Company (MSC) Legislation came about, there has been many reinventions of old Composite service providers, new Umbrella Companies and a re-emergence of some off shore schemes. It all adds up to a lot of confusion for Contractors, especially those coming into the market as first timers. So in an attempt to keep it simple, here are what I believe to be the golden rules:

  • Stay away from Off-shore – last time I met with HMRC – they stated that they would be going after Contractors using those models. How they locate the Contractor working through an Isle of Man scheme is not known to me, but they seemed pretty adamant.

  • It is legitimate to run a Limited Company but be prepared for more responsibility and more paper work. The MSC legislation means that an “Accountant” should not be selling you “85% take home – guaranteed” – they also cannot have control of your business banking.

  • PAYE Umbrella – Many are new to this and do not truly understand what needs to happen. Be careful of being offered over inflated expense led quotes that are not based on reality. Mr HMRC is watching. An expense dispensation is not an excuse to claim for things you do not incur.

We (Parasol) have, of course, only ever provided a PAYE service and believe that our solution is the best on the market. I say that based on 8 years of defining a solution that offers more than simply timesheets and expenses. I predict that some of these new companies will fall by the wayside as legislation gets tougher and that the good ones will progress – an obvious statement in many ways but worth looking back on in a few months and years.