Articles - 19th June 2019

Fiverr has a successful IPO, new measures are taken to battle late payment, and the collapse of UK productivity

Words by Emily & Jack

Fiverr represents a turn in the gig economy with its successful IPO

Freelance marketplace Fiverr had a good first day on the New York Stock Exchange.

The company priced its IPO at $21 per share last week, raising around $111 million. It then started trading at $26, with shares climbing for most of the day and closing at $39.90 — up 90% from the IPO price.

Fiverr is one of the most well-known companies facilitating the so-called gig economy. When it filed to go public last month, the company said it has facilitated 50 million transactions between 5.5 million buyers and 830,000 freelancers.

Investors seem willing to bet on the company despite the fact that it’s losing money, reporting a net loss of $36.1 million on revenue of $75.5 million in 2018.

“We are on the path to profitability,” co-founder Micha Kaufman said. “That’s the balance we’re trying to keep — focusing on growth while building a business that would be profitable in the long term.”

They ended last week with a stock price of $41.64, but then evened out to $31.15 at the close of market yesterday.

IPSE takes new measures to battle against late payment

With IPSE’s research discovering that two-thirds of self-employed people have suffered from late payment they knew major steps needed to be taken to stop this injustice.

Today The Department for Business, Energy and Industrial Strategy (BEIS) announced it would be introducing new measures to improve payment culture.

Fines and binding payment plans will tackle late-paying clients, company boards will be held accountable for payment practices and they are encouraging businesses to use technology that simplifies invoicing, payment and management.

Currently, freelancers are losing, on average, almost 3 weeks a year chasing up money owed to them by clients.

Not the gig economy: UK productivity would collapse without £104bn project sector

Freelancers working in the project sector contribute more to the economy than the creative industries and drive wider economic performance, new research from the CRSE (Centre for Research on Self-Employment) has found.

The ‘project economy’, made up of freelancers brought in for individual projects such as new products, innovation and infrastructure, contributes approximately £104bn to the UK economy every year.

Qualitative research found that project freelancers add value by giving businesses flexible expertise beyond their permanent employees, enabling innovation and entrepreneurship as well as by helping them to navigate peaks and troughs in demand.

Andrew Burke, Chair of the CRSE and the report’s author, said: “The research finds that the UK economy would be far less entrepreneurial, innovative and ultimately would be more sluggish if firms did not have access to high-skilled freelancers. It shows that freelancers add a huge amount of value to firms both through their flexibility and their specialist skills.

“Our research shows that the high-skilled freelancer project economy is an essential part of the wider economy, adding five times more than equivalent gig-based work. That’s why it’s time for government policy to catch up with this rapidly developing sector and design policies that will give it the support and encouragement it needs.”

The ‘project economy’ accounts for 73 per cent of the UK’s highly skilled freelancers – nearly five times the 15 per cent working in a ‘gig’ capacity.

Treasury ‘loses £8bn a year’ from self-assessment under-reporting

One-third of people who file a self-assessment return don’t pay as much tax as they should, creating a loss to the Treasury of £8bn a year, research has found. More than 10m people fill out a self-assessment tax return each year. These include self-employed, individuals earning more than £100,000, company directors and those who receive income from renting out a property.

HM Revenue & Customs estimates that £48bn of self-assessment tax should be paid annually. However, a study published this week calculated £8bn of this is not collected due to under-reporting of income by taxpayers. Almost as much tax is lost as the UK spends on fire services, buses and nursery places.

An HMRC spokesperson said in a statement that the figures were a number of years old. “New systems and new ways of working were introduced over the period, meaning that risks that might have been dealt with as a self-assessment enquiry in the earlier years are now being dealt with by new means.

The study found that 59 per cent of taxpayers declaring only self-employment income were found to have under-reported. Under-reporting was most prevalent in the construction, transport and hospitality industries, where more than half of taxpayers under-reported.

Self-assessment taxpayers in Northern Ireland were more likely to under-report than those elsewhere in the UK. Half of the taxpayers from Northern Ireland were found to be non-compliant, compared with between 35 per cent and 39 per cent across the rest of the UK.

Robert Palmer, director of Tax Justice UK, a campaigning group, said: “What this research reveals is there’s a big chunk of tax that doesn’t get paid and with some resource [from the government] could bring in quite a lot more money. HMRC has had its headcount and funding slashed in the last 10 years. The government needs to properly invest in HMRC.”

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