Connecting to LinkedIn...




Osborne’s Budget – good news for contractors, says giant group

News that there is to be a clampdown on tax avoidance has been welcomed by professional umbrella employment provider, giant group.

In today’s Budget, Chancellor of the Exchequer, George Osborne, announced that the government is definitely going to go ahead and crack down on National Insurance avoidance through offshoring.

This news will plug a gap previously brought to light in a speech to the Scottish Lib Dem conference by Chief Secretary to the Treasury Danny Alexander. A tax loophole has allowed firms to avoid up to &pound100m a year in National Insurance by setting up offshore payroll services in tax havens such as Isle of Man, Jersey and Guernsey. The result has been that many employees haven’t been eligible for statutory payments like sick pay and maternity pay, but were not made aware of this.

Matthew Brown, Managing Director of giant group commented on today’s Budget: “The commitment from George Osborne to take action on those who don’t pay tax is great news. At giant, we recognise that the majority of businesses pay all necessary National Insurance, but for those who don’t, it can have a severe affect on employees. With stricter rules, there will be a much wider access to benefits, such as sick pay or maternity pay, which can only be a positive outcome for contract workers.”

A TIME FOR ACTION ON COMPLIANCE? Comments from Andrew Webster, Outsauce

In amongst the cross-ballot box arguing around debt reduction and growth targets, today’s Budget held good news for small businesses, start-up agencies and PSCs. A reduction in corporation tax, alongside the new Employment Allowance which will bring a &pound2K respite from employers’ NI contributions, provide a strong incentive to strive for growth.

Positivity too for jobs in general and for recruiters operating in the private sector, with a further 600,000 jobs anticipated in 2013 and a &pound3bn investment in capital projects announced for 2015. As we outlined in our comment on the Autumn Statement [], a flexible UK workforce will be essential to supplying these projects – concerns still remain over a skills deficit, particularly for some of the niche energy sectors (shale gas is to receive particular attention) but in general any announcement of additional jobs has to be good for the recruitment industry.

Other points to watch with interest – the increase in the personal tax allowance to &pound10K, which will lead to a larger proportion of staff falling outside pensions auto-enrolment, as well as the cap on public sector salary increases, which may lead to further wrangling around contractor employment. 

But for us, this Budget was about the crackdown on tax avoidance, and in this regard we were left a little wanting.

The rhetoric was there Osborne talking of & lsquo;naming and shaming’ those promoting tax avoidance schemes and the table-thumping declaration that & lsquo;this government is not going to let you get away with it’, but the detail was woolly at best.

The full Budget Report talks of & lsquo;consultation on new powers’ and & lsquo;legislation being introduced’ around various issues, including the new General Anti Abuse Rule, but for now, we’re still unsure what this new, tougher landscape will look like.

These things take time of course, and some specifics were outlined, for example confirmation around the amendments to IR35 provisions and new agreements for exchange of information with Guernsey, Jersey and the Isle of Man on potentially taxable offshored income, but we were hoping for greater clarity and action – for contractors to ensure they’re operating compliantly, and for agencies who tell us that they’re keen to see a clampdown on unscrupulous operators.

Our compliance survey will be released in the coming days, and clearly shows that recruiters need to see those operating outside the law brought to task. Rhetoric is all well and good but in order for HMRC to continue to receive the industry’s support, we’d like to see some of these changes soon.

Responding to today’s Budget, Stuart Davis, Chairman of the FCSA says: “Today’s budget held little surprises for our members and the flexible workforce more broadly. Encouragingly, the Chancellor abandoned any former notion to impose further red tape on the flexible workforce, meaning the FCSA’s message has clearly been heard in our recent meetings with the Treasury.  However, the Chancellor didn’t cut any red tape either, demonstrating that we still have a long way to go to communicate to Government the true value of the flexible workforce and the even greater contribution they could make to economic growth, given the right conditions.”

Commercial Director, Rob Searle, said:

"We're still operating in a challenging market - but has noticed an increase in the volumes of vacancies in the last year.  With news today of an additional &pound3 billion investment in infrastructure from 2015 onwards, this increase in vacancies has the potential to strengthen, helping to address overall concerns of the industry and provide a key driver for job opportunities and growth.  Investment in the short term, however, may do more to stimulate the economy.

Whilst high profile developments, such as HS2 and the 4G roll out, will undeniably assist in boosting economic growth, smaller projects, for instance improvements to Britain’s network of motorways, can also provide a well-needed boost to Britain. Developments such as HS2 might grab the headlines, but we also need to ensure that funding for smaller scale projects is not forgotten. As well as driving job opportunities, projects on roads, railways, bridges and beyond can help facilitate overall economic growth far greater than some other forms of public spending.

To assist these small projects further, we hope to see some consideration for the reassessment of legislative processes for planning in the future. These processes can be lengthy and expensive, so to ensure that firms can remain sustainable we need to make the process of getting the green light on projects as simple as possible."


Articles similar to

Articles similar to