Tag Archive | "national insurance"

Hammond Does U-Turn on Tax Grab


Just like I reported about last week, the Chancellor Philip Hammond went after the self employed in his budget with a tax grab, and many were outraged!

So much so that it now looks like Mr Hammond has decided to do an amazing U-Turn on his initial plans, in a move that we have never seen before from a UK Chancellor.

In a brief letter that was sent to all Tory MPs (I reported how many back benchers were not impressed by the tax grab plans), the Chancellor said that he would no longer be making Class 4 National Insurance payments more expensive for the self employed.

The right thing has been done of course, but it does raise some questions that need answering.

Firstly, how on Earth did they think doing a tax grab was a good idea in the first place? Just like I said last week, it was another slap in the face for our nations self employed. It’s almost as if many people in the government don’t have a clue.

Secondly, does the Chancellor have no conviction at all in what he is doing? To do a U-Turn so soon after the Budget really has made a lot of people wonder if this guy is even up to the job. The UK could soon become a laughing stock…it probably already is.

I didn’t agree with his decision to do the tax grab (and that does make me question his qualifications for the job), but what really makes me wonder about the Chancellor is the fact he was so quick to give in.

Sure, it’s good that you are willing to listen to other people and take on board feedback, but sometimes you have to stand behind your decisions. I think this was one of those times for Philip Hammond.

Other world leaders will no doubt be looking at this and noting down that the UK are potential easy targets when it comes to the negotiation table.

I’m not saying that Philip Hammond should not have backed down and gone away from his initial plans…but I think he did it way too quickly, and like mentioned before, with no real conviction is what he was doing.

Anyway, it’s good to see that self employed people are not going to be subjected to this tax grab, but in my opinion it really doesn’t change anything.

Contractors, freelancers, gig workers, small business owners…they need to be rewarded for what they do for the economy, especially when you consider that Brexit is just around the corner where the UK will be leaving the European Union.

These are the men and women that the government want on their side, but what are they doing to achieve this? Not a lot if you ask me.

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Tories court contractors by suggesting tax system simplification?


The Conservatives are courting freelancers and umbrella company contractors by breaking news that a future Conservative government may overhaul the tax system.

Self-employed Brits currently have to navigate a minefield when it comes to taxation in the UK, thanks to the unique role they play in the economy. Unfortunately the tax system as it exists – and has existed for decades – is superbly ill-suited to contract workers, and the Tories say that if a future Conservative government could do away with much of the burden that freelancers face in their tax burdens.

The big idea so far is to combine income tax and National Insurance payments merged together in one tax. Some industry experts say that doing so will make the amount of money all taxpayers owe the Treasury from their earnings much clearer, and that’s something that freelancers need most desperately at the moment. Most pundits agree that doing so would be a serious boon for the self-employed in that it will make compliance considerably easier, but warnings have surfaced that without crystal-clear guidance on any new changes there’s a serious danger of people ending up worse off in the long run.

For what it’s worth, the increased transparency that would accompany such a change would make millions of British contractors breathe easier. Right now, many freelancers feel that meeting their tax obligations properly is only a bit more dangerous and confusing than it would be for a deaf person to try to to land a plane at night in the rain with their eyes closed and their hands tied together.  No, I’m not necessarily taking the piss here either – it sounds hyperbolic but if you’ve ever tried to suss out whether you’ve paid enough tax as a self-employed contractor you’ll know exactly what I’m talking about.

If you ask me, almost any change would be for the better as long as the veil would simply be lifted from the currently Byzantine regulatory system when it comes to taxes in the UK. Don’t tell the Treasury, but I would even be in favour of a minuscule tax increase as long as it just meant that I would have an ironclad guarantee that I wasn’t about to run afoul of some barely-understandable rule written in language archaic enough to belong on the stage of the Globe theatre.

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Will rising unemployment create more umbrella company contractors?


Last week’s unemployment figures made depressing reading for everybody, including umbrella company contractors.

Data from the Office for National Statistics showed that 2.62 million people were unemployed in the third quarter of this year. Youth unemployment is a matter of grave concern, with the figures showing that 1.016 million young people are now without a job.

Kevin Green, the chief executive of the REC, was clearly distressed with the youth unemployment figures and said the government needs to take urgent action to rectify the situation.

He reiterated his calls for a National Insurance holiday for small businesses that hire young people. Furthermore he urged businesses and recruitment experts to raise awareness and create better avenues into work.

Government policy must revolve around jobs and growth, he continued, and George Osborne’s Autumn Statement later this month must kick-start the process. The government must start taking real action – just talking about it is no longer good enough.

Will rising unemployment be enough of a deterrent to stop workers looking for pastures new? According to a study by Train4TradeSkills, more than 25% of workers are dissatisfied with their current position and the majority of them intend to make a career change within the next five years.

Top of the dissatisfaction table comes people working in the retail sector. With only 14% saying they are very satisfied in their job. People in the leisure and hospitality sector are the most satisfied, but at only 27% the percentage is still not high.

Interestingly, 46% of the employees questioned for the survey said they wanted to be their own boss. With unemployment continuing to rise, self-employment may be the only option available to the UK’s dissatisfied workforce.

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Treasury admits income tax and NI cannot merge completely


Some limited company contractors have been hoping that the government’s proposal to align income tax and National Insurance would be the final nail in the coffin for IR35.

The Office of Tax Simplification recommended that the government examine the idea, but the Treasury has now announced that the two systems will not merge completely as National Insurance needs to retain its own identity.

Treasury officials said that instead of replacing two systems with one, the coalition will examine whether the systems can work more closely together. National Insurance has to remain distinguishable from income tax because of its contributory nature, and any reforms must keep that identity in place.

Before any integration plans are put into place, the Treasury needs to confirm that the advantages exceed the upheaval that will be caused by altering the current systems. If after examining the evidence, the government believes it is worth pursuing the proposal, there will be further extensive consultations after the Budget next year.

However, the Treasury does admit that running NICs and tax as separate entities provides employers to make tax driven decisions that otherwise do not make commercial sense.

The latest Treasury paper does not mention IR35 explicitly, but does say the NI system needs to be reformed to fit the labour market changes that have taken place in the last 60 years. The UK is still operating from a model that was implemented in the 1940s when only one member of a household worked, the majority of workers had only one job and hardly anybody worked overseas.

We now have a situation where some people have several part-time jobs, more people are self-employed and going abroad to work is not unusual.

The government’s vision is for an efficient, fair and simple system that everyone can understand. The evidence so far points to aligning the treatment of earnings more closely rather than fully merging income tax and NI.

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Should umbrella companies be concerned about income tax/NI merger?


Umbrella company contractors may be interested to learn that a firm of chartered accountants has expressed concerns about the plan to merge income tax and national insurance.

MacIntyre Hudson LLP said the government’s current proposal lacks clarity. First of all, it’s unclear whether the merger would also apply to employers’ National Insurance contributions. This is a matter of concern because the impact would depend largely on whether both employees and employers are affected by the change.

The accountancy firm has a further range of concerns including the impact the merger would have on overseas workers who pay social security in their home country.  MacIntyre Hudson believes foreign nationals could be discouraged from coming to work in this country.

Other concerns involve the complexity of dealing with the salaries of people who earn less than the national insurance threshold as well as the taxation of benefits in kind.

Finally, the proposals would forge a greater divide between the employed and self-employed and workers would not be encouraged to change to employed status.

The OTS believes that merging income tax and National Insurance will cut red tape and the merger could be timed to tie in with real-time reporting.

The government is due to announce its final proposals later on this month. It believes that integrating the two systems would remove economic distortions, reduce bureaucracy and improve fairness.

HMRC has had a lot of problems recently implementing new systems. One could be tempted to think that introducing real-time reporting at the same time as merging National Insurance and income tax is a sure fire recipe for disaster!

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Firms need tax breaks to encourage them to hire young people


Prospects aren’t looking too bad for contractors at the moment, but unfortunately the UK’s young people are still struggling to find employment.

Albert Ellis, from recruiter Harvey Nash, has echoed the calls of the CBI for the government to provide tax breaks for companies that hire young people.

The UK has nearly 1 million unemployed youngsters and the CBI wants the government to waive the first £1,500 of an employers National Insurance bill in return for hiring a jobless 16-24 year old.

Ellis says this would effectively mean that for every ten young adults a company takes on, it gets one free. He went on to say that his own company would take on additional graduates if the tax break were implemented.

Furthermore, Ellis believes that employers would take on more young people if the National Minimum Wage were frozen.

The REC has also been a long-term proponent of a National Insurance holiday for small businesses.

Kevin Green, the chief executive of the REC, was recently engaged in discussions with the business and enterprise minister, Mark Prisk. Green explained that the REC has been asked to draw up proposals to encourage companies to hire young people.

The Confederation will continue to push for government action, as well as showcasing the positive role recruiters play through the REC’s Youth Employment Charter. Nearly 100 REC members have already signed up to the Charter, which aims to work with schools and colleges to raise awareness of the opportunities available to the future workforce.

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Confidence amongst small businesses collapsed in Q3, says FSB


Umbrella company contractors may be concerned to learn that small business confidence collapsed in the third quarter, according to the Federation of Small Businesses.

The FSB runs a Voice of Small Business Index and after registering +0.3 at the end of Q2, it fell right back to -9.3 last quarter. As a result of such a dismal showing, the FSB has called on the government to make targeted cuts to VAT and extend the National Insurance holiday scheme for small businesses.

The national chairman of the FSB, John Walker, explained that it is hardly surprising that businesses are losing confidence when they are faced with rising costs and falling revenues. An unfortunate consequence is they have to lay off staff to compensate for the increased expenditure on overheads.

For the first time since the Index began, 5.8% more businesses think they are going to have to make staff redundant than hire them over the coming months. The government must take heed and develop a more robust growth plan, he continued.

Furthermore, for the first time confidence in all UK regions is now in negative territory and we urge George Osborne to carefully consider the NICs holiday proposal and implement this when he delivers his Autumn Statement on November 29th. Unless measures such as this are implemented, there is a very real fear that the economic recovery will falter, Walker concluded.

Despite the drop in business confidence, most small businesses expect their condition to deteriorate only slightly over the coming 12 months.

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Poor service standards have been going on for years in HMRC


Umbrella company contractors may be interested to learn that MPs do not accept HMRC’s excuse that problems with implementing NPS were to blame for poor standards of service.

The Commons Select Committee welcomed the Revenue’s admission that service standards were unacceptable but said issues surrounding the standard of service have been going on more many years and the department could not use the implementation of the new NI and PAYE Service as an excuse.

The Committee expressed its disappointment that HMRC had not done more to develop performance indicators that give a realistic view of customers’ end-to-end experience even though its predecessor committee had recommended such action be taken in 2007.

The report highlighted three areas of concern in the service standards provided by HMRC. These were access to telephone advice, response to postal enquiries and offering offline alternatives to online filing and assistance.

MPs also pointed out that HMRC’s claim that it had saved £1.1 billion without negatively affecting its performance lacked credibility. The committee found that its witnesses were nearly unanimous in their opinion that the decline in the standard of service was linked to budget cuts.

The Committee has called on the coalition to refrain from making any further cuts to HMRC’s budget.

Mike Clasper, the chairman of HMRC, did admit that things did not run smoothly for much of 2010 and claimed the department had been working extremely hard to improve things this year. More calls are now handled immediately and the mail backlog has reduced by half. Things still aren’t as good as the department would like, but they are much better than they were last year, he added.

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Umbrella companies warned on using expense scheme


HMRC has issued a warning to recruiters, including umbrella companies, against the adoption of a new business model for travel and subsistence.

The ‘pay day by pay day’ model enables employers to apply NI and income tax relief to employees’ incurred expenses each pay day. The effect of this is that tax and National Insurance are only paid on the balance.

However, the Revenue recently said that this model is not compliant with the Social Security Acts or the Taxes Acts. Any employer using the model is not calculating the correct PAYE because Income Tax liabilities are calculated over the course of a year.

HMRC also pointed out that the Social Security (Contributions) Regulations 2001 do not allow for deductions from earnings in situations where an employee pays travelling expenses out of his total income.

In May, the Revenue said it was looking into a different business model whereby the employer could pay travel and subsistence claims to their employees in cash and the employees then pay a voluntary ‘financial advice payment’ back to the employer.

Following HMRC’s announcement, Saffery Champness, a firm of accountants, warned that employment businesses using the model could find themselves coming under increased scrutiny.

A spokesman for the company said it would be interesting to see how the Revenue handles this, but any business operating the ‘pay day by pay day’ model should expect to find themselves under greater scrutiny and possibly even investigation.

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Limited Company? Umbrella? Self-Employed Umbrella?


If you are entering into a contract with an agency you will no doubt have been faced with the daunting options of choosing your route – either going PAYE directly with the agency, going limited or using an umbrella company.
From our discussions with contractors, many are still unaware of the what each option actually means to them and what, if any, the risks are to them.

Agency

Working directly to the agency is by far the simplest and safest route open to contractors. You get paid by the agency for the hours you work, everything is taxed and Ni’ed at source, you get holiday pay and statutory sick pay etc. so what hits your bank is yours and you don’t have to think about anything else.
The downside is that due to legislation the agency has to pay you PAYE and you cannot claim travel expenses week by week, as although you suffer the Tax and NI consequences as though you are an employee, you don’t get the advantages of employee expenses rules.

Umbrella

The umbrella route is fairly straight forward, you are an employee of the umbrella company, as such you are entitled to national minimum wage and holiday pay for every hour worked. You can also claim genuinely incurred travel expenses, and will usually receive a top up salary if there are any monies left in the umbrella company after it has accounted for its margin and company costs.

In addition, as an employee, you are entitled to all the statutory rights of employees, such as maternity pay/paternity pay, statutory sick pay etc

The risks to you here are fairly minimal, however you must be aware that only those expenses incurred wholly, exclusively and necessary in the performance of employment duties can be legitimately claimed, and if the Revenue were to check it is you, not the company, who are liable for tax and NI on incorrectly claimed expenses. Every contractor should be extremely cautious of umbrella companies encouraging them to simply “shove through” expenses as they could be hit with a hefty tax bill when they least expect it.

Does low risk outweigh the benefit? Quite often unless you have a rate of £10 per hour or more and do a lot of travel for your job then working directly for the agency may be your better option, as unless there is scope to pay you significant travel expenses from the monies received by the umbrella you will not see a substantial difference in your take home pay.

If you do have a significant amount of travel expenditure and your rate is sufficiently high then the benefit in your pay will be substantially noticeable.

Self-Employed Umbrella vs Limited Company

There seem to be a lot of misconceptions among contractors as to what it means to be self-employed, and the risks and burdens associated with being self-employed. Many contractors think that being self-employed means the Revenue will be watching them, that they will have to jump through a ridiculous amount of hoops and that they will end up with a raw deal.

The stigma surrounding self-employment is somewhat unjustified, and many contractors opt to work through their own limited company instead under the misguided notion that it is somehow a “safer” and less “burdensome” alternative.

Burdens – So what are they?

1. As a self-employed individual you must complete a tax return and account for your own tax and NI – True.
As a limited company contractor you would also need to complete a tax return, but on top of this you would need to set up a company and company bank account, register as an employer and ensure your PAYE and NI is calculated and paid across correctly on an ongoing basis for any salary paid out, complete a corporation tax return, file accounts and submit an annual return to companies house.

2. As a self-employed individual you can only claim your expenses back at the end of the year – True – but this only affects the tax due, not what you are paid weekly/monthly.
As a limited company, providing you were also an employee of your limited company, you could reclaim expenses providing they meet the criteria for employee travel expenses, and/or reclaim business on an ongoing basis, however they would still need to be entered on your end of year return/P35 – depending on the expenses reimbursed a P11D and P11D(b) may also need to be prepared.

3 As a self-employed contractor you don’t get holiday pay, sick pay, maternity pay etc and can be terminated at any time.
As a limited company contractor you don’t get holiday pay, sick pay, maternity pay etc from the client and you can still be terminated at any time.

So is it really a burden to be self-employed?

Safer?

As a self-employed individual, who has completed their tax return correctly and paid across their tax and NI there is no risk. If the Revenue were to question whether you are genuinely self-employed it would be the engaging company (the self-employed umbrella) who would be directly in the frame for any liability of unpaid tax and employers’ national insurance. You would not be hit with any further tax bill.

As a limited company contractor, who has completed their accounts and returns correctly and paid the due you would assume there is no further risk, this is simply not true. The Revenue can challenge the company under IR35 (which considers whether, hypothetically, you are a deemed employee of the end client) and it would be your company, not the provider or end client, who is in the frame for liability of TAX and NI. You would be hit with the tax and NI bill.

While limited companies are suitable for a great many contractors, equally they are not suitable for a great many more. They are certainly not the answer if you are worried about self-employment and want a safer alternative. In most cases, as an individual, self-employment is a far safer option than the limited company and it gives you the freedom and flexibility of being independent (which you don’t necessarily get with the umbrella option) without the hassles of running your own limited company (or the worry that your limited company could be a managed service company – a whole other legislative can of worms best avoided).

The risks to the contractor of being self-employed are negligible, the only liability an individual could face is if they incorrectly complete their end of year return, but a decent accountant is not as expensive as many people think and 90% of contractors still benefit from receiving more income than they would have as an agency worker even after paying for accountancy fees.

Limited Company – What are the benefits? What are the risks?

Going limited is a common option open to contractors, the benefits are highly publicised, the contractor can take his income as a small PAYE’d salary (typically up to Personal Allowance) and tax free employee expenses and the remainder by way of dividends out of the company profit, (however the company has had to pay corporation tax 21 % on all profit). This gives the contractor a huge benefit in tax free income (compared to all other models).

Generally speaking if the only reason you are looking at this option is because “someone said you should” or the agency is pushing you that way, common sense dictates this is not an option you should pursue. If you are interested in going limited, speak to professionals, seek advice from your accountant and look at it as an option because you are growing as a business and need a limited company to secure future business, because the risks of just jumping into limited are significant.

There are two huge risks associated with going limited, the first is IR35. IR35 essentially says, hypothetically speaking if we remove the limited company, if the individual were engaged directly by the end client would they be an employee. The upshot of this, if HMRC were successful, is that the limited company would be liable to pay Tax and NI on all divided payments made. This liability rests squarely with the limited company, so the unwitting contractor could see himself lumped with a massive tax and NI bill unexpectedly.

The second biggest risk is the Managed service company legislation. If you are operating through a limited company which is set up, administered and effectively controlled by a provider, and you have little or no control over your company then your company is almost certainly a managed service company. As such if HMRC come knocking for Managed Service Companies legislation it is your company (and potentially you personally), not the provider who set it up for you, liable to pay the Tax and NI on all dividend payments made.

So Which option is best? PAYE or own boss?

This really depends on what you want, generally speaking all options work, but as with everything not all options work for all people. If you are unlikely to keep papers and put your tax to one side neither Limited company or self-employed will be suitable, and if you are a low earner and don’t have reasonable level of expenses the umbrella would likely not be your best options. If however you are after the lowest risk option to you, the contractor, then agency or self-employed have to be your best option.

About the author: David Harmer

David left Accountax  as Operations Director in December 2010 where he regularly defended clients against HMRC attack up to and including tax tribunal level. He was a much sought after umbrella specialist and in January 2011 he set up Marble??, an umbrella company providing a 100% compliant service to contractors.

David Harmer. Director, Marble Commercial Contracting

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Should sole traders be exempt from certain legislation?


The British Chamber of Commerce recently called on the coalition to encourage sole traders to grow by making them exempt from certain legislation.

Employment legislation has been identified as one of the main obstacles to sole trader growth, according to research from the BCC. Sole traders are deterred from hiring staff or contracting umbrella company contractors because of dismissal rules, pension requirements and sickness absence.

The BCC pointed out that the number of sole traders has continued to grow in the past seven years and although not all 3.6 million of them want to expand, some do. The Chamber’s director of policy, Dr Adam Marshall, said that if the government wants to increase employment, it has to make changes to encourage sole traders to expand.

It’s not only sole traders who feel burdened down by the pressures of bureaucracy. Basepoint surveyed its licensees in the South and the Midlands recently and 42% said the government should be doing more to reduce the red tape that holds smaller firms back from expanding.

The decision to increase National Insurance has not been popular amongst small business owners and some respondents felt a 12 month NI holiday should be granted to small firms to encourage them to hire more staff.

The increase in holiday entitlement was also flagged as a deterrent, with one respondent saying that paying employees for being absent for six weeks was too expensive.

The executive director of Basepoint Centres, Brian Andrews, said the economy is still stuttering towards recovery and this is a crucial time for small firms. The government has to understand that small businesses will not be able to grow unless outdated and unnecessary red tape is removed.

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Small businesses want to see a reduction in employers NICs


A new survey from the FSB confirms that small businesses would be more willing to take on staff if the coalition reduced employers National Insurance Contributions.

The survey, entitled ‘Voice of Small Business’ received more than 1,700 responses. 31% of respondents said they would be encouraged to hire more employees if they could pay less in NICs for the first six months of employment. 11% also said an incentive would be the extension of the NICs holiday scheme.

The NICs holiday scheme was set up last year to encourage new start-ups to hire up to 10 employees. However, the FSB would like to see the scheme extended to existing micro-businesses with four employees or less, to encourage them to hire up to three more.

Furthermore, the FSB wants the government to do more to help small firms take on apprentices and interns. 29% of the survey’s respondents said they would be encouraged to take them on if more support was available.

Although a lot of companies want to increase the size of their workforce, many of them are not keeping accurate National Insurance data and their employees’ pensions could suffer as a result. A KPMG survey has shown that fund liabilities can be increased by up to 5% by poor record keeping.

22% of the firms surveyed had missing NI entries and 12% were missing the complete history. 17% had data that was inconsistent with expected retirement ages and 6% had missed contributions. 5% of cases had no salary information and 6% showed participants had left a scheme before the date they joined it.

Roger Higgins, a pensions partner at KPMG, said a lot of pension schemes still have a long way to go before they meet the quality targets set by the Pensions Regulator.

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HMRC staff still receive high bonuses despite blunders


Despite various blunders by HMRC last year that affected umbrella company contractors, the department still spent nearly £800,000 more on bonus payments to staff than it paid out the previous year.

In the current tax year, HMRC has sent out incorrect coding notices to millions of people, including 450,000 pensioners and ‘lost’ £1.3 billion worth of National Insurance contributions.

In the latest HMRC debacle, the Revenue has been unable to match the NI contributions made to the correct individual’s accounts. The money, which is sitting in a suspense account, has been accumulating for the last five years and the problem is thought to affect more than 9 million people. In order to qualify for a full state pension, people have to pay NICs for a minimum of 30 years and there are fears that processing problems could result in some people receiving less than their proper entitlement.

Ian Liddell-Grainger, the chairman of the All Party Parliamentary Taxation Group, said this demonstrated why HMRC must switch to a real time reporting system for PAYE and NICs. Although the Revenue upgraded its system last year, the new system just aligns people’s tax an NI in one place.

HMRC denies that anybody will lose out over the latest blunder and is quick to point out that it sends letters to people when it discovers a gap in contributions. Most of these problems were due to employer’s mistakes in filling out paperwork, a Revenue spokesman added.

The Tory MP for Witham, Priti Patel, said taxpayers will be horrified that the government is spending so much on bonuses for civil servants at a time when there is huge pressure on the public purse.

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HMRC finds £42 billion tax gap


Any contractors currently at work in the UK as either limited companies, sole traders or an through an umbrella company may be interested in a new series of figures recently published by HM Revenue & Customs.

HMRC has announced the release of their new report, which has been entitled “Measuring the Tax Gap,” and it reveals that the amount of taxes that went unpaid in the 2008-2009 fiscal year totaled a hefty £42 billion.

According to HMRC, the tax gap measurement is reached by calculations that compare the total amount of tax due for the year against the amount of tax that was actually paid for that same time period, which then determines the size and severity of the gap.

At £42 billion, which over half of that figure is from National Insurance, income tax, and other direct taxes, the figure accounts for 9 per cent of the country’s entire tax liability, the HMRC stated.

However HMRC stressed that due to their use of new, untested, and complicated calculation methods, the total figure cited by the report may not be entirely accurate.

Financial expert and report author Kerry Booth, commented on the report’s findings, stating that estimates have been developed by HMRC for tax gaps in regards to both the main indirect and direct taxes that it collects, and that the current belief is that the results are as accurate as possible in light of the available data, but HMRC will continue to examine the methodologies involved in the calculations and is not afraid to re-evaluate their findings in the even that new data and information is made available.

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SMEs and contractors face up to public sector cuts


Nearly 150,000 small businesses in the UK, including many umbrella company workers and limited company contractors, are facing fears that they may become insolvent if they cannot maintain their contracts with the public sector.

According to recent research conducted by insolvency experts R3, this reflects an overarching trend wherein one out of three small businesses feel they rely on public sector contracts in order to remain viable in their chosen markets. As last year’s business failure figures were approximately 26,000 for the entire year, the number of businesses skirting insolvency this year is dramatically higher.

Steven Law, president of R3, commented on the trade organisation’s findings by saying that while the likelihood of all 150,000 businesses losing their public sector contracts is quite low, the UK’s large number of small businesses who rely on contracts with the public sector, which have been de rigueur since the 1990’s, any cuts at all from the public sector will be quite keenly felt.

Mr Law concluded by saying that British businesses had an obligation to not only keep this risk in mind but also to seek out professional business advice well before any crises arise due to their public sector contracts drying up.

In related news,the Coalition government’s new National Insurance Contributions holiday, which was instituted in order to drive the growth of new business, is considered to be unlikely in regards to compensation for heavy public sector losses, says IntaPeople.

The Engineering, IT, and Legal recruitment specialist warned of such an event after the new holiday was introduced this past week.

The new scheme offers up to £5,000 to new businesses for taking on up to ten new employees during the first year of its operation under the scheme, which is geared towards business growth outside of the City, the South-East, and the South.

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Government implements savings regime


In a recent announcement by the Government, its Spending Challenge has borne fruit in that three ideas submitted to it through both public sector workers and members of the public will soon be implemented as new governmental policy.

These three are the inaugural ideas to be introduced through the Spending Challenge, and will be utilised to reduce UK governmental deficit in the hops that the country’s economy can be rebalanced.

The three new changes to be instituted are the following:

1. In order to save as much as £1 million annually and also to reduce administrative burdens for the NHS, junior doctors will no longer be subject to as many CRB checks as previously;

2. Save an additional £1 million annually by distributing National Insurance numbers using a plain paper letter instead of a plastic card;

3. Implementing a governmental auction website to increase the ability to sell second hand and surplus Government equipment, in addition to expanding the eDisposals service put in place by the MoD.

All of the ideas being implemented originated from the Spending Challenge website set up by the Government, which received in excess of 100,000 ideas for spending cuts.

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