Issue 1; 26 March 1999
Since this site was first posted on Saturday 13th March
comments having been coming in fast. To all of you who made
them, most of them well thought out and cogently argued,
many thanks.
I started out with good intentions to answer each and every
one, but simply have not been able to keep up. To those
who only got the Auto responder message, my apologies. I
have tried to post a representative selection of them on
the site, each one has numerous others supporting, not posted,
with similar sentiments. To give you some idea of the activity;
On Wednesday 17th the site got 1500 hits, a week later on
Wednesday 24th it got over 40,000 and I received over 1000
emails. No press, word of mouth!
Two new major developments to report
1.0 - Likely Inland Revenue Guidelines
The proposed guidelines from the Inland Revenue would appear
to be along the lines of the conversation that Tim Warr
had with the person responsible for drafting them. They
have now been up for some time and one would assume that
if the Inland Revenue did not agree they would have been
taken off.(See link on the site for original). This clipped
from the site:-
"The new rules will not attempt to distinguish between contractors
supplied by agencies and those who provide their services
directly to clients. Instead, they will look at whether
the work carried out by a contractor more closely resembles
employment or self-employment. Therefore for example, a
contractor who is brought in by a client, whether directly
or through an agent, as a pure consultant to advise on a
suitable system for the client to implement is unlikely
to be caught by the new rules. On the other hand, a contractor
who works as part of a team, under supervision direction
and control of the client, alongside other contractors and
employees will almost certainly be caught by the new rules.
APPLICATION OF THE NEW RULES
Where the new rules apply it is likely that clients and
agencies making payments directly to a contractors company
will be required to calculate and pay over tax and National
Insurance as if that payment was a payment of salary. A
limited company receiving such a payment will not suffer
corporation tax on that payment and will be able to pay
it on to the contractor as salary without any tax or National
Insurance becoming due from the contractor. Such a company
will of course, still incur expenses such as accountancy
fees. No tax relief will be available on such expenses unless
the company has other income which is not caught by the
new rules.
Of course a company may have more than one business contract.
Where one or more of those contracts is caught by the new
rules payment for those contracts will be received net of
tax and National Insurance. The company will be able to
deal with any payment for contract not caught by the new
rules in the same way as it has always done.
TIMESCALE
The new legislation is expected to be introduced on 6th
April 2000. The chances of any delay were according to Mark
Nellthorp close to nil."
2.0 - Forum 2000
After a conspicuous silence on this issue the Recruitment
Industry have now picked up the ball on this problem and,
fronted by Giant, have established a group called Forum
2000 to take responsibility for fighting these proposals.
I clipped this from their web site on 26th March:-
"At Giant we believe that there needs to be a strong and
consistent voice within the contracting industry. The best
way of doing this is to form a pressure group representing
end users, agencies, advisors and contractors to make representations
to government and to influence their decisions.
Giant has established forum 2000 and are inviting key industry
figures to action. Our first meeting will be arranged shortly.
The aim of this first meeting is to:
plan how to develop the industry response to the Revenue's
proposals, and
develop a strategy for influencing public and political
opinion to ensure support for the legitimate ambitions of
contractors.
As well as senior figures from the top 25 agencies and
the contracting media the chairman of FRES will be attending
together with representatives from the CBI's taxation committee
and leading accountants and lawyers with interests in the
debate."
The last thing we need is a fragmented approach to the
issue and with Forum 2000 taking responsibility for campaigning
on this issue I wish them the best of luck. The web site
will now concentrate on the following:-
* Act as a focal point for information and opinion on this
key issue with regard to Contractors in the IT and Engineering
Sectors.
* Provide informed and independent analysis of the situation
as it develops
If you revisit the site you will note that I have cut down
the content and focused on the Contractor with some educated
guesses on what it will mean for you.
All the best
Andy White | [email protected]
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