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Contractor Tax Crackdown

Five healthcare workers lost a long running case against HMRC for having avoided paying their income and national insurance tax through their use of managed service companies (MSCs).

These professionals collectively face bills of £160,000 because of a company called Costelloe Business Services.

Seb Maley, chief executive officer at Qdos, a provider of services to contractors, said that HMRC has not fully and clearly laid out which accountancy practices could be considered within MSC legislation:

“Should HMRC decide to target contractors who used such companies under the impression they were compliant, it would be yet another attack on independent workers, thousands of whom are already suffering from the recent arrival of the loan charge. This, however, has the potential to impact a greater number of contractors, none of whom sought to avoid tax when working through MSCs.”

Dave Chaplin, chief executive of the Contractor Calculator website for freelancers, has issues with HMRC, calling their interpretation of the MSC law “bizarre”:

“[HMRC’s] guidance implies that if [an] accountant provides a product to help you determine your level of possible dividends, or shareholders’ funds, then this amounts to sufficient control to warrant it being an MSC. This is a bizarre interpretation, because all online accounting packages do this as part of preparing standard company accounts — including the ones preparing for Making Tax Digital.”

A Mixed Week For Uber

As Uber cruises towards a blockbuster public float later this week, shareholders and employees are set to feast on the proceeds of a deal that could value the ride-hailing company at close to $90bn. However, thousands of drivers are also striking this week in an effort to win better pay and conditions.

As Uber heads for what will almost certainly be the biggest IPO of 2019, dissent is brewing within the massed ranks of drivers that helped to propel the business to its $100bn status. It’s a dispute that is fast becoming emblematic of the huge disparities of wealth in the global technology industry and allegations of worker exploitation.

Drivers have also threatened legal action over claims that the company is failing to comply with EU data disclosure obligations.

“I think investors should have a lot of questions right now about a company whose model overall appears to be losing money, but any profits that it is gaining on mature markets is based on a completely exploitative model that has nothing to do with basic working rights in our country”, driver Nicole Moore told the Telegraph.

“Uber has also automated the management function and hidden it in algorithms behind the digital curtain while insisting drivers are their own bosses,” he says. “Drivers are suspended and fired at will without due process, right of an appeal or even an adequate explanation.”

They could easily go to court for this action. In the Gig economy, it is vital that workers are able to earn enough to survive, and given that the average driver works a 50 hour week and is paid less than minimum wage, something needs to change before they can put forward such a high valuation without raised eyebrows.

The Future Freelance Generation

Here are Forbes’s predictions for the next generation of freelancers:

Who they are

They will cover a wider scope of professions: airline pilots, cultural anthropologists, emergency room physicians and will be more prominent over a wider span of the world: Africa, Asia and Latin America.

Freelancers will be younger, because freelancing will become something more people want to do at the start of their careers. They predict 50% freelancers will be under 30.

What they’re like

Being part of a worldwide community, freelancers will be working with people all over the world. 65% of Asian freelancers have gigged for North American companies.

They will be more ethnically, racially, gender and religiously diverse, and more demanding about working for ethical organisations.

They’ll also be more up for picking up and moving to other locations, freelancing on the go. This is down to improvements in technology allowing people to really work from anywhere.

Their career views

Freelancing will be wildly seen as an attractive, legitimate career path.

Moving between a freelance and corporate path throughout their careers will be seen as normal for professionals.

Freelancers will be on top, not the clients, with gig economy workers set to become increasingly picky about choosing what clients to work for.

The line between freelancer and employee will blur with projects becoming longer, and as freelancers create longer-term portfolio relationships with companies.

Their work

Companies will be desperate for the next generation of freelancers, with their in-demand skills in AI, blockchain, machine learning and robotics.

There will be more tools on offer to freelancers, with online talent platforms offering education and coaching to freelancers who are represented on their site.

HSBC to stop hiring contractors

After September, HSBC has told their contractors that they will no longer be able to work there unless they work as full-time employees, due to changes to IR35.

But HSBC has sweetened its ultimatum for some contractors on a so-called ‘keep’ list it has drawn up, by saying they can stay on as long as they work via a third-party from September.

Bowers Partnership, a recruiter of niche financial contractors, confirmed: “As we’re still several months away from the draft legislation…for HSBC to make such a bold move – assuming it transpires, seems somewhat premature.”

But it does display the discomfort that most companies have with dealing with changes to IR35.

Call for free movement for musicians post-Brexit

The Incorporated Society of Musicians (ISM) has called for the Government to preserve the freedom of movement for UK musicians in a post-Brexit Europe. They’re asking for special allowance for touring artists, to have a cheap two-year visa created for roving talents, as well as clearer regulations and a new health insurance scheme.

When the majority of UK bands, singers and orchestras livelihoods depends on European travel for gigs and festivals something needs to be done in order to keep the UK music industry thriving.

The economic impact Brexit will have on musicians was highlighted by Conservative peer Lord Black of Brentwood:

“If and when the UK leaves the EU, it is our prosperous music industry – now valued at £4.5 billion a year to the economy – our musical heritage, and our worldwide reputation for musical excellence which must inevitably be one of the most secure engines for prosperity in post-Brexit Britain.”

Commenting on the ISM report, the Home Office says that musicians will be protected post-Brexit: “Our future skills-based immigration system will support these vital industries, while also enabling us to control immigration in the national interest.”

 

 

Have you checked out our Beta yet? UnderPinned has created a management tool that will totally change the way you freelance. Have a look, and let us know what you think.

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