| BUDGET 2004
Last Wednesday's Budget was expected to herald the most significant changes for freelancers since IR35 was announced five years ago. There had been much speculation about what form the measures announced in the Pre-Budget report - widely dubbed as IR591 - would take.
In the end, the Chancellor announced that profits distributed from small companies to individuals on or after 1 April 2004 must have had corporation tax paid at a rate of 19%. Profits retained within the company are not affected.
PCG had selected a team of specialists, including representatives from Accountax, to provide expert tax and political analysis on Budget day and formulate a definitive view of the announcements from a freelance small business owner's perspective. Key members of the team included PCG legal director Dr Simon Juden, Dave Smith and Jason Piper from Accountax Consulting Limited, and PCG senior political adviser David Ramsden.
An analysis of what the Budget means for freelance small businesses is available on the website.
PCG ON BBC WORKING LUNCH
PCG's legal director, Dr Simon Juden, was invited to appear on BBC's Working Lunch programme on Friday 19 March, with John Whiting, tax partner at PricewaterhouseCoopers, to discuss measures announced in the Budget that would affect small businesses.
In response to a viewer's question about paying dividends before 1 April 2004 in order to avoid the new 19% tax, both John and Simon advised that this was worth doing, given the amount at stake being £1,900.
Simon pointed out that most freelancers were forced into incorporation by commercial reality, because in many sectors, such as IT, work could generally be found only through agencies, which did not wish to risk being found to be employers and therefore insisted upon incorporation. Otherwise, it would be possible for freelancers, such as one would-be web designer who had called the programme for advice, to operate as sole traders.
Simon said that PCG welcomed the prospect of a full consultation and review of small business structures, commenting that the self-employment laws dated back to the 19th century, and were clearly inappropriate for the 21st century.
A recording of the programme is available in
the Press forum.
31 MARCH 2004 DEADLINE FOR 100% CAPITAL ALLOWANCES ON IT
Time is running out for owner-managers to buy IT equipment, qualifying their companies for an attractive tax break. Small businesses that invest in information and communication technology equipment up to 31 March 2004 will be able to claim 100% first year allowances, thereby getting immediate relief on the whole cost of their investment.
This covers expenditure on IT equipment, including any software purchased for use with hardware, all computer equipment and peripherals, cabling for use with computer networks, the creation of your business website and hi-tech communications technology such as WAP mobile phones.
If you want to take advantage of this enhanced capital allowance, you should make your purchases before 31 March 2004, as it was announced in last week's Budget that the allowance would be reduced to 50%. Any business with a turnover of less than �5.6m, and with fewer than 50 employees, qualifies for the tax break.
TAXMAN CONCEDES ANOTHER IR35 CASE FOR PCG MEMBER
The Inland Revenue has dropped its IR35 case against Steve Milsom, based in Sandy, Bedfordshire, a PCG member. His company, Surton Limited, specialised in software testing. The Revenue's decision followed a long battle lasting nearly two years. Steve had innocently submitted his contract to the Revenue for review, long before the freelance community understood the risks associated with so doing. Not surprisingly, his contract was pronounced as falling within IR35.
PCG chairman Simon Griffiths was delighted to learn that the case had been closed. "Our track record at defeating these cases speaks for itself," he said, "and I am happy that yet another PCG member has proven that they are a real business and that IR35 should not apply to them. Steve's client did not control his work, nor was there any mutuality of obligation, so he was clearly in business on his own account and should have been treated accordingly."
Read the full story on the News page
IR35 PAYBACK! UPDATE
PCG and Accountax launched an IR35 Payback! scheme two weeks ago, offering many freelancers who have paid up under IR35 to claim back their tax paid.
Commenting on the response to the no win, no fee scheme, PCG legal director Simon Juden said, "Our office team has responded magnificently to the massive interest, with the first hundred information packs going out within a few hours of the scheme's launch. IR35 Payback! offers the perfect opportunity for the large number of contractors who paid up under IR35 in error to recoup the taxes paid, and PCG is geared up to handle the ongoing high levels of interest anticipated."
The first 50 freelancers accepted on to the scheme will receive �1,000 of their repayment immediately by way of a cheque from Accountax in advance of repayment by the Revenue - and will keep it even if the Revenue eventually wins the case. For further information, see the website.
PCG ELECTIONS 2004
PCG's annual elections for the Consultative Council (CC) will be conducted via a dedicated area of the website between 19 April and 3 May 2004. Candidates must put themselves forward for nomination by 12:00 on 26 April 2004, and will need to be seconded by ten other members in order to go forward to the voting stage. All full members are eligible to vote. For further information, see http://www.pcg.org.uk/InternalNews/Elections.html
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REAL LIFE MEETINGS
Farnborough and environs - Monday 22 March
2004 19:00
The Prince of Wales, Rectory Road, Farnborough.
Forum
discussion.
Contact: wasADB (Andrew Banks)
Aberdeen - Thursday 25 March 2004 - POSTPONED
Proposed "Smarter Freelancing" seminar has been postponed owing to an insufficient number of people definitely wishing to attend.
Kent
Suggested meeting, probably towards back end of March.
Forum
discussion.
Contact: Fat32Stone (Matt H)
Nottingham - Wednesday 31 March 2004
Suggested meeting at the Admiral Rodney.
Forum discussion
Edinburgh - Wednesday 7 April 2000 18:00
Bert's Bar (Snug) on William Street. Non-members welcome.
Forum
discussion.
Contact: john_ferguson (John Ferguson)
Thames Valley/Maidenhead - Wednesday 7 April 2004 20:00
The Greyhound pub, Queen Street, SL6 1HT. Simon Juden will be presenting the PCG Budget briefing at 20:30, so please arrive promptly. Forum discussion.
Chester/Manchester - Thursday 22 April 2004
Chester Business Park. Forum
discussion.
Contact: jat (John Thomas)
Dundee
Meetings in the Dundee area?
Forum
discussion.
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