IR35 is to be retained with the government committing to improving the way it is administered, according to Budget documents.

The documents say that following the publication of the OTS review of small business tax, the government will commit to setting up a dedicated helpline staffed by specialists.

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One IT Recruiter’s personal view of making VAT payments to HMRC when running a small IT Limited Company.

Jane Stevens, UK Service Delivery Manager at Specialist IT Recruitment agency, Jenrick IT, kindly wrote this article on her views on this subject.

Having worked in the IT recruitment sector for many years, I often come across IT professionals who are a little wary of moving from a permanent role into a contract position. I have also recently come across contractors who, for many years, have been working through various schemes which now fall foul of the new anti-avoidance disguised remuneration legislation (an EBT for example) introduced by HMRC recently. Therefore the contractor’s options for running their business are now somewhat curtailed so therefore more are now seriously considering running their own Limited Companies.

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Thank you to Jane Stevens, UK Service Delivery Manager  at Jenrick IT for writing this article in response to the initial article on EBT Schemes last month.

There have been many schemes set up over the years including EBT (Employment Benefit Trusts) Schemes in order to take advantage of loopholes in the law where trusts or other vehicles are used to reward employees (contractors) which seek to avoid or defer the payment of income tax or National Insurance Contributions.

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With 2011 being ‘pitched’ as the year of recovery for the contracting market; 1^st time contractors and, perhaps even, more experienced contractors need to be aware of the potential pitfalls of using third parties to manage their payroll. Legislation changes for EBTs (Hotlink to previous article) and now news of 2 umbrella companies going into liquidation emphasise the need to take good advice.

The recent high profile bankruptcy of two ‘umbrella’ companies highlights the importance of recruiters and contractors undertaking better due diligence of service providers before engaging their services, says giant group, the contractor services provider. (more…)

This information on EBT Schemes was kindly supplied by 1st Option Accountants. For more information regarding the topics raised in this artcile then please contact 1st Option on any of the contact details shown at the bottom of this page.

What are they?

An Employee Benefit Trust (EBT) is often centred on a pension or profit-sharing plan and is usually administered by dedicated third-party EBT management firms, acting as the company’s trustee. Such schemes are widely used by corporations to augment the benefit packages of UK workers - they usually offer some taxation deferral advantages. (more…)

One of the most welcome IR35 victories was announced this week, with Novak Brajkovic being cleared of being an employee. The fascinating area surrounding this case is that Mr Brajkovic would never have been investigated had he not approached the HMRC for help and assistance. (more…)

It would appear that the HMRC are making good on their commitment to chase off-shore schemes. A recent high court case has been lost by a  contractor who was utilising such schemes and has sent shock waves  through the industry.

Philip Fanthom (Managing Director - Jenrick IT) commented ;

“We are  constantly updating our tax and legislative information on our website and blog to keep contractors informed. We did, in fact warn about the possibility of a HMRC clampdown on ‘off shoring’. Even still, there appears to be a  worrying agenda against  the freelance community by the government. “

(More details about the case is below - courtesy of Contracting Made Easy) (more…)

The British taxman has enlisted its two main IT contractors to assess the viability of offshoring, in a move that could pave the way for tax forms to be processed overseas.

HM Revenue & Customs approached Capgemini and Fujitsu six months ago about its Quantum project – an internal initiative to yield savings, mainly in IT, of £205million. (more…)

The Revenue has kept its word of tackling abuse of expenses in umbrella companies by withdrawing the allowance for staff who stay overnight with friends or family.

In their latest online briefing , officials at the UK tax office said their review of the Friends and Family Allowance found it had “no legal basis for giving tax relief.” (more…)