Finance Act should be welcomed by umbrella companies
December 15, 2010 in Contractor News, Freelancing, Industry comment, Life, Recruiter News, Tax
Publishing the contents of the act early was a positive move by the government as it allows businesses to fully digest the act, understand its implications and make sure their business models are fully prepared for its introduction.
It was no surprise that the government has taken a hard-line with EBTs and other forms of tax avoidance as this has been discussed for some time, however, some providers of services to contractors have taken the announcement as an opportunity to release misleading information and confuse the market. This is inaccurate, irresponsible and fundamentally wrong.
There must be a distinction made between umbrella companies who work closely and openly with HMRC in order to protect contractors, and companies that exploit loopholes and make bold or unrealistic claims about take home pay. Correctly structured and compliant umbrella companies have nothing to fear from the Finance Act, and the reality is that this provides an opportunity to demonstrate that compliance and transparency to government, contractors and the agencies that place them.
In the past, this industry has been tarnished by unscrupulous providers making unrealistic claims about the amount of take home pay a contractor can expect, by offshore providers not fully explaining the risks involved in using an EBT scheme or operating with a lack of transparency to a level that even the contractors involved in the schemes cannot fully explain how they work. Thousands of contractors have also been persuaded to join these schemes without being informed of HMRC investigations into them.
This had to stop and therefore the Finance Act 2011 should be welcomed by umbrella companies. It now remains the duty of leading umbrella companies like Parasol, and organisations such as the FCSA, to support and educate contractors and the agencies that place them, encourage further transparency, open discussion and compliance throughout the industry, and ensure that the bad practice of a few does not bring down the industry and prevent professional contractors from running their business and making a valuable contribution to the UK economy.
by Rob Crossland
How was 2010 for you?
January 4, 2011 in Contractor News, Freelancing, Industry comment, Life, Recruiter News, Tax
Welcome to 2011 and very best wishes to everyone for the year ahead. Let’s hope it’s happy, healthy and of course prosperous. Here at Parasol and Clearsky we are looking forward to another busy year and as we approach our 11th year of trading, there is much to be done.
2010 was an interesting year in many respects, January 2010 saw the high profile collapse of an “Umbrella” company and I use the quotes as the reality of the model was once again exposed and the spectre of offshore activities discovered. The noise around the Agency Workers Regulations (AWR) intensified as the reality began to sink in and this was followed by National Minimum Wage consultations and HMRC consultations on the overall operation of PAYE. The new Government then instigated the office of tax simplification and ir35 once again regained top spot in Contractor related news and debate. More offshore solutions came under pressure through some high profile collapses and alleged financial irregularities. So on the political landscape it was pretty full on and our founding membership of FCSA helped us contribute and educate on many of these issues for the (usually unseen) benefit of Contractors and Agencies alike.
The actual business of contracting was tough with roles and rates remaining a challenge. I am not sure 2011 will be hugely different but I think steady progression is better than boom and bust. As we progress through the year I also expect the noise around AWR to intensify, remember that the true employment based solution is already doing much of what AWR requires and this compliant solution will remain after October!
I therefore look forward to 2011 with sensible optimism and confidence that Contracting will remain a crucial part of the UK economy. We will be doing our very best to support this and have always been about the long term, here’s to the next ten years!!
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