For years these schemes have been sailing close to the wind as they use HMRC dispensations and apply them to all clients.
Maybe this year we will see the end of these schemes so that quality clients can choose quality Accountants.
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( 3 / 157 )The last important and notable IR35 event occurred in September 2008 when the High Court decided in favour of HMRC in the Dragonfly case.
In the summer of last year HMRC’s feeble IR35 tax yield during the period 6th April 2002 – 5th April 2008 was exposed and one might have been forgiven for believing that the Revenue had given up the ghost. There does however appear to be no plans to re-think or scrap IR35 even if a Conservative government is elected this year. So what is happening with IR35?
The answer may be twofold. The most recent and important status cases within the last 15 months have involved the construction industry. For the last few years, following the implementation of new CIS rules from 2007, HMRC’s status resources have been chiefly deployed in the construction industry as they view it as a soft target to extract decent tax yields. Further evidence of this attitude was demonstrated by the publication of HMRC’s consultation document, in July 2009, entitled ‘False self-employment in construction: taxation of workers’. There has therefore been less manpower to throw at IR35 cases.
From 1st April 2009, HMRC inherited new and wider ranging powers of inspection and for much of last year tax officials were getting up to speed with these and it was only in the last quarter of 2009 that Qdos started to notice the increasing use of these powers. It is fully expected that 2010 will see a greater increase in inspections at the premises of taxpayers and these are likely to include a fair number of personal service companies where IR35 has been flagged as a potential issue.
Whilst IR35 may have been hibernating for the last few years it could well be about to awaken and contractors must not be complacent. Keep watch and be vigilant.
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( 3.1 / 139 )Well almost certainly. Hopes that Britain’s recession ended between July and September were boosted last week after official data from the Office of National Statistics revised upwards its assessment of construction activity. Contradicting its most recent estimates for third quarter GDP, the ONS said construction output rose by 2% as opposed to the 1.1% drop it had factored in. Overall this meant that GDP fell by only 0.1% in the three months to September and some economists believe that the economy may even have grown if further revisions are made to services sector data. Such a revision would
come as a boost to the government ahead of next year’s election, thought The Times. The UK is suffering its longest recession on record and is the only G20 nation not to have emerged from recession in the third quarter.
Indeed, Britain’s dominant service sector grew for the sixth consecutive month, according to data collated by the CIPS/Markit Purchasing Managers’ Index (PMI) - services account for around three-quarters of the country’s total economic output. Any figure above 50 indicates rising activity and the PMI reading for November was 56.6, albeit down slightly from the previous month. Looking ahead, the services sector could gain more traction with companies’ optimism about the business outlook climbing to 73.4, up from 71.4 in October. Analysts said that the data was consistent with economic growth
of about 0.5% in the final quarter of the year, which would mark the end of the recession.
Other data released last week was mixed. The Government’s expectation that the country will spend its way to economic recovery took a bit of a knock when it emerged that consumers had paid off more of their debts at a record rate in October.
Official figures showed that net consumer credit decreased by £579m as households cut back on new loans. The figures also showed that, despite the Bank of England’s £200bn programme of quantitative easing, the availability of new credit to businesses tightened too. There was better news on the home front though, with the number of new mortgages agreed edging up to its highest level since March 2008. Car sales too are racing ahead, thanks to the government’s £400m car-scrappage scheme – new car registrations surged by more than 57% last month as buyers rushed to take advantage of the ‘cash for
bangers’ scheme which is due to finish in February and also avoid the VAT rise due next month.
Whilst the scheme will have boosted manufacturer’s production it will not be enough to reverse the overall downward trend of the last 12 years – The Financial Times reported that according to ONS data, manufacturing now contributes just 12.4% of GDP compared to
20% in 1997.
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( 3 / 189 )So the time is nearly upon us and the eagerly awaited Pre Budget will be on Wednesday this week.
Will we see the end of the Child Care Tax Voucher scheme?
It has been suggested that this has received a stay of execution, but in the fullness of time will be removed for those deemed to be 'high income households'!
Maybe the Chancellor should consider the fact that they are deemed 'high earning' is because they bother to invest their money into their children being looked after and going to work to pay more tax!!
Of course in considering this budget statement, how can we forget the lovely thought of planning our way around the 50 and effective 60% tax thresholds? I am sure all the people who the government is going to hit here are excited to see how long they will have to work each year before the money they earn is their own.
If you consider a 50% tax rate, that equates to 6 months working for the government and then the 60% marker is over 7 months of the year.
Let's hope we don't have any more bad news on the horizon.....and we will of course update you in our summary that will come out on the 10th December
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( 3 / 185 )False self employment in the construction industry – the Govt issued a consultation paper this year planning for legislation that removes 300,000 self employed workers in the building trade by side stepping the existing case law on self employed status. Now that the consultation is over will this legislation be enacted in the budget ? Will this mean that other business sectors will be targeted in the same way ?
Umbrella Company compliance – A consultation paper on Umbrella Company Compliance was left inactive in last years budget, with the Govt deciding to keep watching the industry. Could this be the moment to redefine Temporary workplaces or Overarching Contracts of employment ?
Income Shifting – The original consultation on Income Shifting was put back on the shelf a few years ago, but it never went away. There may have been a reason for that.
Tax Thresholds – With the pressure on raising taxes all too apparent the temptation to reduce the upper 50% tax threshold to catch more tax payers may be too much.
Whatever Mr Darling comes up with, we should not expect anything too generous for Contractors, and there is a fair chance that there will be less drama rather than more!
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