Issue #11 • £3.95

Contractors, Consultants&Freelancers UK

INSIDE THIS ISSUEContracting Can Be Complex ... 1Featured Add-On 2What Does The ‘Imminent’ Future ... 3Propiteer 5Guest Article: More Reasons Not To ... 7Cybersecurity 10FreeAgent Focus 11FreeAgent Guest Article 12

Contracting Can BeComplex – You Need an Expert on Your SideIf there is one thing that we have learned since we set up Meades Contractors as a specialist company to look after our freelance and contractor clients, it is that they really value personal support.

Contractors need expert support to run their Personal Service Company (PSC), understand IR35 or operate through an Umbrella if their contract requires it. That is in addition to dealing with the day-to-day strains of being your own

boss and keeping one eye out for the next opportunity – it can be quite challenging as a contractor in 2020!

Only by having support from people who have been there, done that and deal with these issues day after day can you get the best help.

Would you like to know what expert help looks like? Meet the vastly experienced and enthusiastic Natasha Goss, who now heads up the Meades Contractors business. With over twenty years’ experience, she is the person you need on your side.

A big step and a new ambition

Natasha is an FCCA qualified accountant with Senior Client Manager experience and has worked

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Featured Add-onDesigned To Make Your Life Easier

exclusively with contractors for over a decade. She left University with a BSc(Hons) degree in Mathematics and Statistics before completing her ACCA accountancy qualification. While at University, she worked as a steward at a Premier League football ground, so she has enjoyed the atmosphere of many a match backwards – without actually seeing any of the action. She originates from Kent and loves to get down to the coast when visiting family, especially as Hertfordshire is probably the most inland county in the UK.

Joining Meades in November of 2019 was a big step for Natasha, and heading up the contractor business has allowed her to turn all her experience as a part of someone else’s team into creating a team of her own. She is now 100% laser-focused on making all our contractor’s lives easier and richer: and is looking forward to meeting you all.

I think that this appointment is one of the most significant and positive moves we have made since we set up the specialist contractor division of our business. And I know that all of our contractors will soon start to enjoy the benefit of Natasha’s influence. The contractor market is changing rapidly and as we roll out new services, such as Meades Umbrella, it is more important than ever that our contractors have access to qualified accountants and advisors to support them in making the decisions that protect their income.

A little more about Natasha

With two school age children and a husband to take care of Natasha has a busy life, both in and out of working hours. She is also something of a socialite (which is an essential quality for any Meades employee) and loves spending time with family and friends.

So, if you want parenting advice (please ask elsewhere), but for any compliance, IR35, deadlines, tax planning, or other contractor-specific business or accountancy questions, please get in touch with Natasha.

The ancient fable of the hare and tortoise has many truths and lessons to share with the modern business world: not least the idea that the first to market is not always the best. With its much-publicised licencing fines, software issues, passenger safety concerns and court battles, Uber is still holding its own at the forefront of app-driven transport solutions. But it is no longer alone in the battle to rule the taxi-driven roads.

New companies like Kapten and Bolt are rapidly making names for themselves with new services, smart technologies and (most importantly for the punters) lower prices. Of course, it is not just the lower prices that will benefit app-loving taxi users, the competition itself can only be good news for all (drivers and passengers).

As in any commercial environment, when demand is met by choice and a battle for business, the service levels and value for money is destined to win. So, go and download their apps now; save yourself a few quid and decide who is deserving of your ongoing business.

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What Does The ‘Imminent’ Future Hold For Your Contractor Status? We’ve been talking about this for a while now. But like most other things in life, the majority of people only react when the warning lands on their doorstep having transformed into an inescapable fact.

In April THIS YEAR everything will change

In less than three months, all contractors in the UK will be affected by the change. IR35 follows the same rules – but responsibility for determining contract status will be handed over to the end-client of your services. To enable us to help contractors prepare and fully understand the consequences and expectations of their future we held a survey of our own contractor clients: and these were the results.

The question we asked was: Where do you see your personal situation being after the April 2020 IR35 changes?

This is what you told us:

• 56% of contractors saw themselves continuing to work through their PSC (Personal Service Company) outside of IR35 (ie. operating as a company, paying themselves a salary and drawing dividends) • 8% of contractors believe they will be contracting through their PSC, being caught inside of IR35 (ie. treated as an employee of their end client and therefore subject to PAYE and subsequent taxes) • 9% of contractors intend to start operating through a 3rd party umbrella company that acts as an intermediary between them and their client and provides payroll services • 13% of contractors said they would opt for becoming full-time employees; giving up

the benefits of being freelance while simplifying their tax and payroll administrative burdens • 14% of contractors said they would retire altogether or chose some other form of income-generating venture to pursue.

The results got me wondering about the wider contractor market, so I did some further digging. Through research and conversation with colleagues and industry peers, it would appear that contractors sit between three similar sized groups. A third plan to continue operating through their PSC, the second third will seek an umbrella solution and the final third opting for taking a permanent role and leaving the contractor market.

What these results tell me

I believe one of the aims of HMRC is to remove contractors from the market (and increase the tax take). These changes will certainly weed out the less experienced contractors – those who are not yet considered industry experts. Contracting is set to be far less desirable until you are well established and can command contract terms that continue to offer you the remuneration that is in keeping with your skills and experience, as well as the flexibility of contracting. I am pleased to see very few of our clients by comparison to the general market are considering full time employment.

What is obvious to me is that there is no clear consensus on the way forward, and to be honest I did not expect there to be – after all, every contractor’s circumstances are different. What is apparent, is that Meades clients are heavily weighted towards continuing to operate through their PSC and I don’t believe this is naivety, in fact it is more likely the opposite. Continued over ...

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Most contractors enter the market and choose the perceived security of a large accountancy practice who look after thousands of contractors, believing they will receive specialist advice from experts. With a few years’ experience under their belt, most contractors see that the cookie-cutter approach of larger accountancy firms is not enough. Experienced contractors look for the support they need to get the most from contracting. Smaller firms, like Meades, can offer truly tailored advice on remuneration, VAT, expenses, pensions, investments and more – all with the aim of helping contractors benefit financially from taking the risks associated with running your own company.

The contractors we support tend to be more established, often with long term relationships with end-clients or agencies, and are more tuned in to what will be required to continue to operate in the most profitable way. Clearly PSC is the way to go where possible – and only those who will be forced to use an umbrella by the end-client will do so. Will you be forced to take employment or work through an Umbrella?

Potentially, yes. Here’s why:

By passing the responsibility of IR35 assessment to end-clients, HMRC have guaranteed that many of the large firms employing contractor services will opt for a blanket approach to minimise their

risk and burden of due diligence – I expect to see more end-clients insisting on contractors using an umbrella.

I can see the commercial sense of taking this approach, given the huge burden HMRC are placing on end-clients who use the services of hundreds, if not thousands of contractors. For contractors however, this is wholly unreasonable – but as we know, HMRC are not in the game of fairness.

In reality, if contractors are forced down the umbrella route, the remuneration package they negotiate will need to take into consideration theburden of tax, NI and umbrella fees.

Taking a stand

There is nothing we can do as an industry to change the way IR35 will be managed, but we must work together to hold on to your rights as independent contractors. As April approaches I am increasingly concerned by the number ofconversations I am having with contractors whoare being railroaded into working through specific umbrellas.

I would like to invite you to connect if you have:

• Been told to use a specific umbrella, or one of a short list of umbrella providers • Been stonewalled by your agency when questioning your right to use an umbrella of your choice • If you are unsure of the implications of using a specific umbrella.

I hope to learn more about the way the contractor industry is being reshaped, so I can help you to continue to operate as an independent contractor and make the most of the money you earn.

Connect with me on LinkedInhttp://bit.ly/2UbXjPA Or drop me an emailpaul@meadesgroup.com

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on HMRC IR35 Guidance and CESTGuest Article

There was a period of silence in respect of IR35/off-payroll cases at the tax tribunals for more than half a decade from 2011, with the lead up to this being mainly unsuccessful outcomes for HMRC.This period was purported to be the same time HMRC was reviewing its approach to IR35 cases (thought to be as a result of its lack of success) and introducing changes to the intermediaries’ legislation in the public sector.

Since the resumption of these cases at the tribunals, the vast majority of cases involve a public sector client and, in several cases, a high profile ‘worker’.

While all the evidence points to HMRC attempting to justify the need for change in the public sector (soon to be brought in across the private sector, too) such attempts are continuing, in many cases, to backfire on HMRC.

The two most recent cases to be heard at the tax tribunals instead highlight, again, the flaws in HMRC’s fundamental interpretation of the IR35/off-payroll legislation.

While HMRC has had some wins since 2017, it has by no means won the majority of cases, nor have any of the cases it has won been a slam dunk; unlike some of the taxpayer wins.

And the reasons for the success of the taxpayers? Simply put, HMRC’s failure to adopt the correct fundamental approach and its continued misinterpretation of the fundamental principles determining IR35.

At the risk of repeating myself, neither you nor your clients (public or private sector) should be relying on HMRC’s guidance, including CEST (Check Employment Status for Tax), to determine the IR35 position. One only has to look at comments from the tribunal judges, and in some cases clear criticism, to see the flaws in HMRC’s approach.

The correct approach

RALC Consulting Limited saw an emphatic win for the taxpayer. The case involved the provision of IT services to public sector clients, including the DWP, by Mr Alcock.

More Reasons Not to Rely

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The correct approach to any IR35 case is well documented, both by the legislation itself and by the tribunals.

One should take into account ALL written contracts, their operation – i.e., the working practices – and the relevant circumstances, to construct the hypothetical contract between the individual providing the services and the end client.

The approach HMRC seems to have taken in several recent cases, including RALC, is focusing on one aspect of the case, i.e. specific contractual clauses, and making inferences based on that aspect.

In RALC, HMRC appeared to focus on the fact that Alcock was previously an employee of Accenture, one of the clients in the appeal, during which time and through which employment he also worked on projects for the DWP.

From this standpoint HMRC sought to infer mutuality of obligation (MOO) existed during the appeal period by reference to clauses within the written contracts.

The tribunal did not accept this approach as it did not take into account ALL the available evidence, further stating that one cannot infer an obligation from silence in a written agreement as to working hours.

This is not the first time HMRC has been criticised for not considering all relevant evidence and making inferences.

It was also apparent in RALC that services had been provided to other clients during the appeal period. HMRC is recorded as not pursuing these engagements for IR35 as they were ad hoc or short term. This highlights another fundamental error in HMRC’s approach, as it is perfectly possible to have ad hoc or short-term employment. In fact, this was highlighted by case law seemingly put forward by HMRC in RALC.

It is also noticeable that in many recent IR35 cases HMRC has chosen to instruct solicitors rather

than defend cases itself, as tended to be the case historically.

This again suggests HMRC is seeking to justify the changes to the IR35 legislation and the perceived loss to the exchequer from taxpayers’ misapplication of IR35.

However, if we look at HMRC’s recent record in the tribunals, this not only appears unjustifiable, but one has to question how long HMRC intends to use taxpayers’ money to defend cases where their losses outweigh their wins and they are not adopting the correct approach.

Inadequacies of CEST

It has been long reported that CEST does not take account of mutuality of obligations or the secondary test for IR35, that being inconsistencies with employment – or, put another way, whether someone is in business on their own account.

Mutuality of obligation

HMRC’s flawed approach to mutuality of obligations has been highlighted in several tribunal cases, most recently in RALC.

Discussing HMRC’s submission, the tribunal said it did not accept Alcock’s previous engagement led to an expectation of work every day during the course of an assignment, such that it crystallised into a legal obligation.

The tribunal, taking account of all the relevant evidence, accepted that there was no binding expectation, guarantee or accepted contractual right for Alcock to be offered a minimum of work because all parties realised the contract could be cancelled anytime if the client stopped or abandoned a project.

Of the several projects entered into during the appeal period, as a matter of fact, the first was terminated three months early and in the case of the second, Alcock continued to work when it was unclear whether the project would continue, resulting in RALC not getting paid for the last two weeks of work.

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These two examples in themselves leave me to question why HMRC pursued this case to tribunal when either one is a clear example of a lack of mutuality of obligations.

In relation to such evidence, the tribunal found that the contract provided no security and no obligation for work or pay in a notice period, and that the lack of contractual right or express guarantee of any hours or work, or that Alcock was to complete a specific project, is significant, suggesting there would be no contractual right for Alcock to claim against the client were he not to have been offered work during the contract.

RALC was clearly outside of IR35, not only due to a lack of mutuality of obligations but due to the many inconsistencies with employment (not to mention there was also a finding of a lack of control as to what and how, which the tribunal found outweighed the client’s right of control in relation to when and where the services were performed).

Inconsistencies with employment

The circumstances of many recent cases have found the tribunals not being able to determine whether a contract falls inside IR35 based on the fundamental principles of IR35, but on whether the factors are inconsistent with an employment contract.

This was the case with another high-profile case, Canal Street Productions Limited, involving the services of Helen Fospero who provided guest presenting services on Lorraine and Daybreak.

Nicola Smith, Fairford Tax Consulting

Nicola is a specialist advisor to Meades Contractors for all mattersrelating to IR35. She provides training for our client managersand guidance in more complex contract reviews. Learn more about Nicola’s work at www.fairfordtaxconsulting.co.uk

Any approach not considering ALL relevant evidence cannot therefore be said to produce an accurate conclusion in respect of IR35.

Any tool not, therefore, taking such factors into account is not fit for purpose.

What does this mean for you and your clients?

The effect date for impending changes for the private sector is fast approaching.

HMRC has not addressed the issues with CEST, as previously assured.

It is clear from recent tribunal cases that HMRC’s approach and as such its guidance is inadequate.

In order for you and your clients to make a determination in respect of the IR35/off-payroll legislation, it is imperative that specialist advice is taken, rather than reliance on HMRC guidance, which merely reflects its interpretation of the law – an interpretation which has been found by the tribunals, on numerous occasions, to be flawed.

It is also important to ensure you take and have a record of the advice/due diligence undertaken in this regard, to prevent HMRC potentially opening enquiries outside the usual time limits (four years for tax purposes) and pursuing penalties. The former was attempted by HMRC in RALC.

Given the contracts were found to be outside of IR35 the tribunal did not conclude on this matter. However, undertaking such due diligence could mitigate a potential liability significantly.

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As with all things in modern online life, the underlying rule is to be careful and alert. Beyond that here are a few practical tips to be aware of when using public WiFi:

Use VPN: a Virtual Private Network is the most secure way to use the Internet as it provides an encrypted tunnel for all your online transactions, eliminating the risks of data theft. It keeps your online activities free from spying and snooping and does not allow any third-party intrusion.

Device Security: use up to date, robust and trusted anti-malware and antivirus software. This is good practice at all times but is even more crucial when you are using public WiFi. Hackers are at their most dangerous when you are at your most vulnerable, so be extra vigilant with attachments, etc. when using public WiFi.

Financial Transactions: no matter how many security measures you take, it’s recommended you limit your sensitive activity while using public or free WiFi – especially financial issues. It is akin to waving your wallet around and leaving it sticking out of your back pocket in a place that is known to abound with pickpockets.

Complex Passwords: it is incredible how many people still use default passwords or family names. Always create your password using a unique mix of upper-case and lower-case letters, numbers, and characters: and this is especially relevant if you frequently use public WiFi.

Secured Websites: not all websites are safe to use. Modern browsers inform you of the more reliable sites (green ticks, padlock icons, HTTPS, etc.) to use. Unsafe sites should be avoided at all times, but the risk is significantly increased while surfing on public or free WiFi services. Be extra careful.

Cybersecurity:Five Safety Tips WhenUsing Public WiFi

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FocusMeet Ruby the RobotAt the end of 2019 FreeAgent introduced us to Ruby, their new AI powered support bot.

Ruby is an excellent way to find useful resources in FreeAgent. Simply click the ?Help button in the bottom right hand corner of your screen. Ask Ruby a question and she will suggest articles and guides from FreeAgent’s huge knowledgebank to help you get things done faster.

Mobile app – are you using all the latest features?If you’re using an iOS (Apple) device, be sure to check you are using the latest version to benefit from the features below. If you’re on Android, you’ll see new features rolling out in February.Here are a few of our favourite recent improvements:

• ‘Pull to refresh’ - if you make an update to your FreeAgent account on your desktop computer, you can now pull down your screen in the mobile app to update it there too. • Search has been added to the contacts list and FreeAgent plan to roll it out to more areas in the very near future. • Contacts have a new home in the app! Rather than living in the ‘Money Out’ area, they can now be found in the main header menu. • FreeAgent have added new options for sharing invoices and estimates on the preview screen. • Voice support and general accessibility have also now been improved.

What are your favourite features? Join in the conversation on Facebook:https://www.facebook.com/meadescontractors/

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Fact or Fiction? 4 Myths of Self-Employment

Guest Article

It’s not always easy to debunk a long-standing myth! Whether it’s the existence of Nessie or the Bermuda Triangle, there are a lot of murky mysteries still lurking out there. When it comes to the self-employed lifestyle, it seems like there are a whole host of misconceptions that need to be put right. So if you’re eager to make the switch to independent working in 2020 then don’t worry - the truth is out there.

Myth 1: pyjama party

The title of this satirical news article says it all: “Freelancer changes from work pyjamas to leisure pyjamas”. It may be satire, but it still stems from a very widely held belief that if you’re self-employed, you must spend all day working in your tracksuit bottoms. In reality, it’s much easier to get into a productive mindset in day-to-day

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clothing and who knows when you’ll need to nip out to meet a client? So while the odd day working in your PJs can happen, freelancers are business people - and they do actually get up and get dressed!

Myth 2: all by yourself

As a freelancer, you may find that your full-time employed pals wonder if you get a bit lonely without water cooler chit-chat to get you through the day - but working for yourself doesn’t always mean being by yourself! Whether it’s attending networking events, working alongside other freelancers in co-working spaces or meeting your clients in person, there are plenty of opportunities to connect with others when you’re self-employed.

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CONTACT08000 234484www.meadescontractors.co.ukexperts@meadescontractors.co.uk

This article was originally published on the FreeAgent blog: https://www.free-agent.com/blog/myths-of-self-employ-ment/

Learn more about the benefits of Free-Agent on our website:http://bit.ly/2QkDdkQ

Myth 3: every day is a holiday

Tired of your friends in full-time employment thinking your life is one big holiday? As a freelancer, you know all too well that you’re often working harder and longer than they are! While it might be an appealing prospect to take time off whenever you want, you’ll know that small business owners need to put the hours in to build up a strong client base and reputation. There’s also an added element of financial risk as, sadly, self-employed people aren’t entitled to statutory benefits such as holiday pay. So in reality, freelancers aren’t always getting away with getting away!

own income can feel intimidating - but starting your own business could be one of the most rewarding things you’ll ever do. When we polled over 700 of our small business customers about their day-to-day working lives, we were delighted to find that more than three-quarters (76%) of them said that they would recommend self-employment to others.

Ready to bust one final myth? Managing your business finances needn’t be stressful! FreeAgent’s award-winning online accounting software is designed to make it a doddle. Why not try a 30-day free trial today?

Myth 4: it’s just too hard

With the safety net of full-time employment removed, it can be more than a little daunting to dive into freelancing. The complexities of the tax system and the responsibility of generating your