Half of the contractors hit by ‘loan charge’ expected to settle with HMRC ahead of April deadline

Sam Meadows reports in The Telegraph that the majority of the 50,000 who are set to be hit by loan charges as a result of tax remuneration schemes have sought to settle with HMRC before the charges are incurred.

Many of the contractors who fall into this category believed that these arrangements, which were common in the 2000s, were legal. A change in the law in 2016 allowed HMRC to issue tax demands on the loans dating back to 1999.

However, Sir Ed Davey and the House of Lords Economic Affairs Committee feel that these responses are “retrospective” and thus unfair on those who were not adequately prepared for the loan charges.

It is important to note that this is not a straightforward win for HMRC. Many of the thousands of people who have not settled still feel that they were not given the time to respond to the charges, or that they do not have the money to pay for the remunerations either way.

HMRC responded that no one would be forced to sell their home, and nor would they be forced to declare bankruptcy unless it was the last resort. They also pointed out that the schemes were not fair on regular taxpayers.

It is also worrying that a HMRC spokesperson found it necessary to point out that no one would be made homeless from the policy change. HMRC is expected to bring in £3.2B from the callback.

Self-employed given limited options for mortgages

The Telegraph reported that it is a far more complex process for self-employed individuals when it comes to applying for a mortgage. Some lenders require a couple of years worth of accounts from applicants compared to only three months of payslips from employed individuals.

This makes the process very complicated since it requires getting hold of HMRC’s elusive SA302 form, which documents earnings from the last four years.

Dilpreet Bhagrath of mortgage broker Trussle, argues: “More standardisation is needed to suit the different types of self-employed borrowers, including contractors, sole traders and directors of limited companies”.

KBC Bank want to take on more self-employed professionals as customers

By introducing business banking services for self-employed professionals, KBC is looking to broaden their customer base, gathering more freelance accountants, lawyers, doctors, pharmacists and engineers.

Offering business current accounts, deposits and credit for property, equipment and working capital purposes, KBC aim to have 0%-15% of self-employed professionals as clients within the next five years.

Mothers take on two jobs when they become Freelance

In the Telegraph, Maria Lally explains how she went Freelance to avoid the £70 a day nursery costs in South London but exasperates: “Far from living the freelance dream, I’d fallen into the freelance trap.”

As Lally’s husband worked away from home she was taking on two jobs – her freelance career and a stay at home mother role:

“It fell to me to do all the school drop-offs and pick-ups. I packed all the lunches; I put all the washing on.

And when I stopped working at 5 or 6pm, I made dinner, helped with homework, did bath time and bedtime stories, and then picked up my laptop at 9pm to spend another hour or so working on the sofa.

I didn’t have a company pension or sick pay, and during school holidays I had to look after the children all day and then work all evening.”

German researcher found that freelance mothers work three more hours a week than their husbands who kept their office jobs, because of the extra burden of childcare. These 287,000 freelancing mothers in the UK contribute £7 billion to the UK economy each year.

Charmaine Parkin, a freelancing mother from Sussex, is currently in the process of suing the government over Universal Credit, and has been given permission to do so by the courts.

“Giving up her work seems to be the only way to receive the amount of assistance that would be sufficient to feed her family and keep a roof over their heads,” said her solicitor Leigh Day.

“An unemployed individual in her position would have almost £400 a month more in UC and this amount would help her cover essential living expenses for herself and her children.”

Consultants are the second highest paid freelancers in the UK, but still rank in the bottom of desirable careers

In a survey done by Protectivity Insurance, Business and Investing consultancy both ranked in the top ten for highest paid positions, but in the bottom for most desirable jobs. Meanwhile, photography ranked in the top for desirable work, but close to the bottom in terms of pay.

However, while many feel that they would not want to consult, those that do report being happy and fulfilled in their work. This shows the divide between expected payment and enjoyment of work in the freelance space.

Gig economy based companies need to tread carefully going forward

After a series of negative court cases, companies that base their hiring upon gig economy and self-employed workers need to be aware of the implications of these choices going forward.

Protest from workers also has a profound effect on the outreach that gig firms are able to generate, while companies like McDonald’s swear on their employees preferring the ability to select hours rather than having minimum wage hours set for them.

However, while many companies claim that they act as an agent between workers and jobs rather than a service for consumers, the question remains: will Uber still say the same when they have driverless cars?

Techcrunch reports that Uber will pay $20 million to settle their independent contract lawsuit in the US. This comes after a wrongful termination case of several drivers in Massachusetts and California.

IR35 is going to hit Scotland’s gig economy employers hard with new tax and National Insurance responsibilities

The demand for contractors in Scotland’s financial service sector is high, with over 30,000 contractors in Glasgow and 2,5000 expected to be taken on with the opening of Barclays’ technology, functions, and operations teams at the Buchanan Wharf development on the Clyde.

The anti-tax avoidance rule is aimed at uncovering the ‘disguised employee’, who holds a permanent position within a company without paying corresponding income tax and National Insurance contributions (NICs).

Employers, not the contractors themselves, will be responsible for determining their employment status, as of April 2020.

Late Payments for Creative Industries comes to £1bn

Findings reveal 48% of creative businesses received late payments in 2018. MarketInvoice found that a typical invoice worth £38,137 was paid 13 days past its due date resulting in the creative business industry being £1.1bn out of pocket at any given time. Larger companies were found to be bigger culprits of late payments (51%) than smaller businesses (41%) and one in seven companies overall (14%) pay invoices more than 2 weeks late.