There has been an interesting recent development around HMRC Accelerated Payment Notices.
Accelerated payment notices, which were introduced by last years finance bill, and are controversial because they require the taxpayer to make immediate payment of taxes requested and deny the tax payer a right to appeal the notice.
HMRC have recently been using these new powers as part of their crackdown on tax avoidance by people using alleged tax avoidance schemes.
These powers are so radical, it was expected they would be challenged, and this has finally arrived. The High Court has given permission for a judicial review which will rule whether the accelerated payment notices are legal.
The judicial review has being brought on behalf of film partnerships by Ingenious Media and will consider the lawfulness of accelerated payment notices. People involved in such partnerships will await the reviews finding, these include some prominent sport stars and entertainers.
A good freelancer that uses an accountant in Richmond is also likely to keep up to date with all of the other aspects of their professional practice, training up their weaknesses and building on their strengths in such areas as making a proposal, negotiating a fee and marketing their services effectively. However, sometimes, there is a more elementary problem that the freelancer faces: the inability to concentrate and knuckle down to work.
This is a serious problem for any conscientious freelancer, given that every hour in which they are unable to motivate themselves means money lost. However attractive the low overheads of working from home can be, such an environment can also bring the greatest difficulties concentrating. There are many ways in which freelancers can recover their motivation and creativity and return to productive work once more, with one of them – taking a brisk walk – being the subject of a fascinating recent study in the Netherlands.
Anecdotes and literature have, for centuries, recommended going for a walk to those suffering ‘writer’s block’, and a Leiden University professor couldn’t pass up the opportunity to prove its effectiveness. In unveiling her findings, Prof Lorenza Colzato said that she had set volunteers convergent and divergent-thinking tasks to find conclusive evidence that creative powers could indeed be boosted by physical exercise. The test of each volunteer’s creative thinking was whether they could come up with ways of using a pen that didn’t involve writing, and sure enough, volunteers exercising four times a week outperformed those with more sedentary lifestyles.
The professor ensured the diversity of the test by also asking volunteers that exercised regularly and those that didn’t to find a common link between three words. Once more, it was those participants that spent more time regularly exercising that fared better on the test. The conclusion of the study was that a person’s brain was trained to “become more flexible in finding creative solutions” by physical exercise – although it didn’t seem to be a long-lasting edge, and also wasn’t as pronounced in people that were very physically fit. Nonetheless, the findings will intrigue many a freelancer using an accountant in Richmond (not, by the way, the worst place to go for a wander in the Surrey area).
Walking is not, of course, the only recognised technique for a freelancer whose concentration is flagging. Other known methods include switching off email, mobile phones and other frequent distractions, breaking down larger jobs into smaller, more manageable tasks with mini-deadlines and setting the morning alarm clock earlier. A freelance client of an accountant Richmond could also choose to perform certain tasks at a certain time of the day, only open an application when it is absolutely necessary for the task in hand and/or start with the easier work first, among the vast range of trusted concentration-boosting methods that probably haven’t been subject to a university study!
Freelancers making use of accountants Richmond have received timely encouragement from the very top ahead of a 24 hour celebration of freelancers across the UK on Thursday 21st November, with Prime Minister David Cameron describing the country’s freelancers as “the engine of our economy” and deserving of his “very best wishes on National Freelancers Day.”
The PM’s warm words follow a month of support for NFD from various quarters, including from other MPs like shadow business secretary Chuka Umunna, as well as business leaders and celebrities.
Mr Cameron said that the country owed “a huge debt of gratitude to the thousands of men and women who have decided to make their living as freelancers”, telling the freelance clients of accountants Richmond that “You have not only taken your own future into your own hands, but you are the engine of our economy and economic revival. Indeed, SMEs are the very lifeblood of our country.”
The country’s freelancers also drew the praise of the mayor of London Boris Johnson, who described them as “brave and ambitious” and providing the UK with “vital talent”. NFD’s London launch will take place later on Thursday, keynoted by BBC The Apprentice star and vice-chair of West Ham United, Karren Brady.
Ms Brady will take part in a Question Time-style debate alongside a panel of experts, to discuss the economic impact of flexible working. The event, at which BBC small business expert Liz Barclay, journalist and broadcaster Nick Ferrari, Salisbury’s Conservative MP John Glen and Sunday Times political editor Isabel Oakeshott will also appear, will be hosted by one of the UK’s best known freelancers, broadcaster Sue Lawley.
Ms Brady signalled that a dedicated celebration of the country’s 1.72 million freelancers was well-deserved, stating: “As a businesswoman, I have first-hand experience of working with freelancers and know that they provide an invaluable flexible resource to clients, helping them grow.”
Other influential figures to have previously hailed the event and the work of freelance clients of accountants Richmond include Countdown co-presenter Rachel Riley and shadow economic secretary Catherine McKinnell MP, who said that freelancers “played an increasingly prominent part in creating economic growth and prosperity.”
The chair of PCG, Julie Stewart, commented: “We are honoured that David Cameron has shown his support for freelancers. Backing from the prime minister shows that our unique way of working is being recognised at the highest level.”
She added that the purpose of National Freelancers Day was to promote and celebrate freelancing’s positive effect not just on the UK economy, but also the work-life balance of workers, concluding that it was “brilliant” that so many prominent individuals were choosing to join in with the celebrations.
The BBC is set to run a much-anticipated employment test on its freelance professionals, both high-profile and obscure, as it seeks to clamp down on personal service companies (PSCs). Clients of Richmond accountants may remember the corporation promising to carry out the test a year ago, following negative national press coverage of its use of PSCs and a critical report from the Public Accounts Committee.
Back then, the BBC had said that it would undertake the test on more than 800 ‘on-air’ workers who were paid not as individuals, but through their own limited companies. The report had said that the government and the BBC had too many staff making their own arrangements for the payment of tax and national insurance, potentially equating to a lesser contribution to the exchequer.
The new test will scrutinise the amount of editorial ‘control’ that the broadcaster has over the activities of each of the freelance workers, which are expected to be predominantly on-air. Should the assessment find a “significant” amount of BBC control of certain presenters and newsreaders, they will be asked to join the payroll, enabling them to be taxed at source rather than allowed to continue with their PSC.
The BBC stated in a news item outlining the assessment that it could not accurately gauge the number of ‘to camera’ freelancers set to be affected, given the “case-by-case basis” on which the test will be run, although top BBC talent, such as Jeremy Paxman and Fiona Bruce, could be within scope. Users of Richmond accountants may be interested to read that so-called ‘off air’ BBC freelancers are already being assessed for the appropriateness of their use of PSCs.
It is estimated by the corporation that around one fifth of its 16,000 production freelancers presently operating through their own limited companies could be requested to join the payroll as employees of the BBC.
The trade group PCG, which represents many freelancers using Richmond accountants, expressed its disappointment at the corporation’s measures against its freelance talent, pointing out that a distinction between employed and self-employed was already made by existing tax rules like IR35. It said: “If there are concerns about tax, it is the tax system that should be reformed, not the way these experts are working.”
The group continued: “Rather than taking the retrograde step of pushing back against these vibrant, successful and rewarding working practices, the government should instead be embracing it.”
The BBC has described the employment test as its response to the criticism of the Public Accounts Committee, despite “no evidence” being found last November that PSCs were used by the corporation to assist tax avoidance. That the test is going ahead will doubtless concern many present and prospective freelance clients of Richmond accountants.
Of all of the recent developments that the clients of Freelancer Accounting’s (http://www.freelanceraccounting.com) accountants for freelancers should take note of, the greatest is surely the simplified expenses regime that is now in place. There are certain business costs that freelancers can deduct from their income to calculate their taxable profit, which in practice amounts to their allowable expenses lowering their income tax. The newly simplified regime enables the use of flat rates, removing the need to figure out your actual business expenses, which can involve more complicated calculations.
The new regime replaces the non-statutory deductions that could previously be claimed for business mileage, board and lodgings or use of home. Simplified expenses can only be used by sole traders and business partnerships, with limited companies and limited liability partnerships excluded. The new regime enables those freelancers using our accountancy services to calculate their allowable vehicle expenditure using a mileage-based flat rate – for cars and goods vehicles, 45p per mile for the first 10,000 miles and 25p per mile thereafter. Motorcycles are subject to a rate of 24p per mile. Businesses that have opted to use the scheme for a vehicle must continue to do so for the duration of that vehicle’s time with the business. You are not able to use the scheme, should capital allowances have already been claimed in respect of that vehicle.
Clients of our accountants in Reading also have the option to claim relief for the use of their home as a business, again via a flat rate scheme, as a replacement for more detailed expenses claims relating to gas, electricity, telephone and broadband costs. You will be able to deduct £10 a month if you spend 25 hours or more a month working at home, rising to £18 a month if you work 51 or more hours a month. Those working 101 hours or more a month, meanwhile, will be able to access a £26 monthly deduction.
There is also a flat rate scheme available to the trader using premises primarily for trade purposes, but where private use necessitates an adjustment. In this case, the allowable deduction will be calculated by the deduction of the authorised amount from the actual expenses incurred. Only such expenses as household goods or services, food, non-alcoholic drinks and utilities are designed to be covered by the scheme, with others – such as mortgage interest and council tax – still needing to be apportioned. The number of people in occupation will determine the exact rate, which could be £350 per month for one person or as much as £650 per month for three people or more.
Are you identifying every possible opportunity to legally and efficiently minimise your tax liabilities? Get in touch with Freelancer Accounting (http://www.freelanceraccounting.com) for more information on the latest legislation surrounding expenses, as well as for informed assistance with the rest of your taxation and accounting affairs from one of our seasoned accountants in Guildford.
You might imagine that as accountants for contractors, it is in the interests of Freelancer Accounting (http://www.freelanceraccounting.com) to persuade you of the merits of becoming a contractor or freelancer. However, it is also true that we make it our business to prepare contractors for many of the potential accounting and taxation pitfalls that may face them – so we’d like to think that we can present a truly balanced and critical view of this particular means of working.
As part of this, we’d like to emphasise some of the aspects in which the downsides of contracting can be perhaps too strongly asserted. Such exaggerated or even non-existent ‘truths’ can include…
A lack of income compared to permanent work
Employers appreciate the flexibility of taking on freelancers and contractors on a project by project basis, and this is actually frequently reflected in the financial rewards. If you have a skill set that is in particular demand, you could as much as double or triple your present take home pay.
There are, however, certain factors that could impinge on your annual earnings as a contractor, such as gaps between contracts and the ever-thorny issue of IR35. However, becoming more professional in your pursuit of contracts and engaging specialist IR35 accountants are effective ways of tackling these respective issues.
It’s difficult to keep your skills up to date
While it may be true that as a contractor, you are not being constantly sent onto new training courses by your boss, the fact that you are your own boss simply leaves you with greater responsibility in this area.
With no need to ask the boss for permission, contracting gives you the freedom to search out and enrol on as many courses as possible, in addition to buying training materials and books and applying their lessons. There’s therefore no reason why keeping your skills up to date should be any more of a chore for you, a client of one of our accountants in London, than it would be for a permanent employee.
You don’t get sick pay, health insurance, holidays or a company car
This may be true, but your status as your own boss does give you the freedom to buy such benefits as you may require, and to bear them in mind in your negotiation of contracts. If you are concerned about possible long-term sickness, for example, health insurance is available at competitive prices while you are still well.
Setting up a company and doing the accounts is a hassle
Those looking to become a contractor for the first time can opt for limited company formation or even joining an umbrella company, and neither arrangement involves a great amount of hassle. The administrative burden of running a limited company is modest, and our seasoned and skilled contractor accountants here at Freelancer Accounting (http://www.freelanceraccounting.com) can certainly help you to navigate those issues that do exist.
The economy is in a difficult place, post credit crunch, with growth stagnant and trouble brewing in the Eurozone. It is easy to become negative about the whole situation, but for those of us old enough, or for students of the dismal science, of which I am both, we know recessions come and go, and also when you are in one it feels as though nothing will bring you out of it. Continue reading