Churchill Knight & Associates Ltd will be attending the ceremony and presenting the Best Small Recruitment Business award to a packed Café de Paris in central London. Lee Wright, Sales and Marketing Director for Churchill Knight & Associates Ltd commented:

“As a company, we’re very pleased to be supporting this award. Our involvement on the night will highlight our dedication to working with agencies large and small.

The recruitment industry is booming and our role within that has greatly increased our understanding of the sector. As part of the services Churchill Knight & Associates Ltd provides, we work closely with agencies to find clients most suited to those services.

The Best Small Recruitment Business award is a perfect platform for highlighting this relationship and the critical role small recruitment businesses have in the industry.
We are excited to present this award to the eventual winner and wish all nominees the best of luck!”

Following your feedback from recent surveys we have carried out, we have listened to your concerns and revised our telephone systems to ensure you get the best possible service, quickly and stress free.

The new ‘Auto Attend’ system will give you, the client, a better way of finding the most suitable member of staff that you wish to speak to. This new telephone system will in effect take out the middle man, whilst still providing you with the option to speak with a receptionist to help direct your call, if necessary.

Most of us have encountered a similar type of telephone system previously – calling the bank and faced with a robotic voice asking what our enquiry involves, and feeling as if we’re getting lost in the number of options presented to us. However, unlike some annoying telephone systems you might have tackled in the past, you won’t be stranded with ours; by installing a one tier process of options, we’ve made this system as simple as possible.

Churchill Knight & Associates Ltd are continuing to improve ways in which we communicate to you; we are fully committed to this aim, so be sure to keep an eye on our blogs to find out what we’re doing to make our services a high level of excellence.

The alterations to the sending process follows on from amendments to the PAYE regulations which now allow employers to provide P60 information to staff electronically.
You will now receive your P60s’ electronically from an online system; this change to the distribution process makes the receiving of your P60 easier and more secure by giving you access to them on our ‘Secure Document Exchange system’.

Don’t worry, this will not adjust the deadline for providing P60 information; this date is currently 1 June following the end of the tax year.
Churchill Knight & Associates Ltd will in future use Secure Document Exchange to share confidential information to you, making the whole process simpler with that extra peace of mind.

Visit our clients’ only home page to find out more about ‘Secure Document Exchange’

How Churchill Knight & Associates Ltd can help you with your Personal Tax return

The 2012/2013 tax year began on 6^th April 2012 and Churchill Knight & Associates Ltd would like to offer you a helping hand in completing your 2011/2012 Personal Tax Return.

As you may be aware, as a director of a limited company you are required by law to complete an annual Personal Tax Return which is submitted to HM Revenue & Customs; this form details and records all sources of personal income that you have received in the tax year and calculates any tax or repayment due.

We know how busy you are, and remembering what to submit and how often can prove tiring and above all, inconvenient; penalties for late or incorrect filing of forms can be severe, so we advise that you approach the completion of all documentation with serious consideration.

Churchill Knight & Associates Ltd Personal Tax Team could help you for a one off annual fee and here are 3 reasons why:

1. It is easy to make a mistake when completing your own Tax Return so it is best left to the professionals.  Especially with HMRC’s harsh new penalty regime since April 2011 for late and/or incorrectly submitted Returns; we can remove this risk.

2. Tax affairs are time consuming!

3. Specialist advice is available based on your specific circumstances.

As you can see, our fees are on a sliding scale, which means the earlier you send in ALL of the relevant information we require, the smaller the fee you will pay!

These fees are based on our standard Personal Tax Return service and supplementary work (property, self-employment, capital disposals, etc) will carry a separate charge. 

Regardless of whether you decide to handle your own Personal Tax affairs or engage the help of our Personal Tax team, you must do the following:

- If you have completed Tax Returns in the past then you are already set up on HMRC’s self-assessment system and do not need to read on.

- If this is the first time that you will be completing a Tax Return, you will need to obtain your own UTR (Unique Taxpayers Reference) number.

- As all Tax Return submissions are now done online, every individual requires a UTR number to ensure successful submission of their Tax Return.  HMRC will not accept any Tax Return without a valid UTR number.
Therefore, you will need to register yourself on the Self-Assessment System to be issued with a UTR number.  In the first instance, you should do this by calling 0845 900 0444. However, you can do this by visiting www.hmrc.gov.uk and downloading Form SA1, completing and returning it to HMRC.

Please note –  when registering and speaking to HMRC you are not classed as ‘self-employed’,  you are ‘employed’ as the Director of your own limited company.

It is essential that you register for your UTR number now to ensure you do not miss any deadlines and incur penalties.
Once successfully registered, you will be sent your own personal UTR number within a few weeks which you would then send to our Personal Tax department, if you would like help completing and submitting your forms.

If you would like more information on our free structure, how to register for your UTR number or to simply save you money, call our Personal Tax team on 01707 871610 or email:
personaltax@churchill-knight.co.uk

Of course, a service/product needs to be affordable but as long as the price is within a realistic range for the benefits to be gained from using the service or product, is the price relevant?

If we imagine a scenario where one asks 3 builders to quote on building an extension to a home. If one estimates that the extension could potentially increase the value of your home by £50,000 and gets quotes for £10,000, £18,000 and £30,000. However, the builder that gives the quote for £30,000 comes with a range of mock up designs that bring unique ideas and value that you had not previously considered. The contractor shows that they have a clear plan and timeline for the project and that every part of the plan is clear in their mind and is on paper. That shows their ability to do the job in time, on budget and to a high standard. However, the other builders just present a sheet of paper detailing prices for materials used and labour cost; there is no personal interest expressed from them, but they may do a good job, you just do not know.

Is that level of trust and confidence worth £12,000 or £20,000; especially when it is to with your home?

Another example of this can be given using the Mac or PC argument. There are PCs available that are more powerful than Macs for less money, why are Apple winning?

Perhaps price became a fixation of society for a number of years through post-war globalisation. Particularly through the 80s and 90s prices for many products and services were falling and people became proud when they got something cheap. It validated and proved that they were intelligent negotiators and showed others that they were not ones to get ripped off easily.

There is value in not buying something just because of a brand name. A designer diamond ring may not actually be as well made as a ring made by an independent specialist. The quality of the stone that one gets for the same money is may not be as good either so it is fair to question price, but only when you find something that is both cheaper AND better quality.

However, many will have learned the painful lessons in the false economy of buying cheap. Haircuts and suits are good examples here. They reflect on us in terms of the perceived value that we can bring to others so why not invest in them?

When a contractor sets their price, they should of course make it realistic but at the same time they really need to look objectively at the value that they can add and how this relates to the service that someone else will provide.

One needs to be considerate of the fact that there is not perfect information in the marketplace, so we need to be active in extolling our value to customers and potential customers through everything that we do. Our value goes beyond just the job in hand; it also extends to how quickly and concisely we respond to emails and calls. How we operate with others and how we prepare for and follow up on jobs.

How important do you think price is?

Unbiased have just released their annual Tax Action Report which analyses the numbers of people eligible for certain tax credits, tax reliefs and benefits and whether or not they claim them.

The headlines of the report are:

• Each British taxpayer is set to waste an average of £421 in tax in 2012.
• The biggest area of waste is tax credits – accounting for over £7.26 billion of wastage.
• 85% of Brits do not actively do anything to reduce the amount of tax that they pay.
• £88.6 billion of tax has been wasted (not claimed) over the past decade.

A few things spring to mind here; firstly, there is currently a huge amount of personal debt that could to an extent be helped with better individual tax planning. Secondly, if everyone suddenly became savvy to this, then what would become of the already hobbled public funds?

The breakdown is as follows:

As mentioned above £88.6 billion has been left unclaimed over the past 10 years. 2012 represents the second highest tax wastage figure in that time, with only last year’s £13.5 billion figure being higher.

As you can see from the above figures, the area of greatest wastage is on tax credits. Many people are not collecting their child tax credits, working tax credits and pension credits. Failure to claim tax relief on pension contributions alone accounts for £2.45 billion. Then in third place (bronze medal as it’s an Olympic year) is tax relief on charitable donations.

We would be interested to get your views on this – is it a problem? On one hand this really underlines the fact that there are major issues in our tax system in the UK. There needs to be a provision for everyone claiming what he or she is due and anything left over being a bonus. However, there is currently a huge public deficit, which would only grow if everyone were to claim.  On the other hand, perhaps the system of tax credits is good for the nation as a whole. It is possible that the majority of the people not claiming them are the people who do not actually need them, therefore is it a hidden redistribution of wealth?

A bit more worrying

85% of Brits have stated that they haven’t done anything in the past year to reduce their tax bill, and 88% of women haven’t done anything.

The reasons given for not having done anything include:

• Half believe they are already being as tax efficient as possible.
• Over a quarter (27%) of people don’t know how to go about being more tax efficient.
• 14% don’t know why they haven’t taken steps to reduce their tax liability.

Karen Barrett, Chief Executive of unbiased.co.uk commented, “Looking back at the last decade and the tax wastage figures in our reports, the numbers are just as shocking now as they were then. This year marks our second highest tax wastage figure on record, only marginally falling from a record high last year.

The message is clear – tax affects pretty much every one of us and with an average of £421 up for grabs for each taxpayer, we should take some time and effort to ensure that we are being as tax efficient as possible. Our stats show that a quarter of people who have taken steps to reduce their tax liability have done so by enlisting the advice of a professional adviser, such as an accountant or independent financial adviser.

Tax can be a complex area to understand and our report clearly shows that as a nation we are struggling to be as tax efficient as we could be. The way tax impacts on our lives will differ from situation to situation but we call on everyone to ‘take tax action’ and to check whether there are any areas where they could improve their tax efficiency.

The most notable of these being the case of the Students Loans boss Ed Lester, who used a limited company arrangement to decrease his income tax bill by £40,000.

The PCG has responded to the spate of articles in the press, which at times have become inflammatory and directed at the one-person limited company structure itself.

PCG commented that: Making out every one-person limited company is an employee trying to avoid tax is fundamentally inaccurate and puts the economic value such personal service companies create at risk.

Of course, for those in the industry it is very obvious that tax avoidance of this kind is minimal. However, it is important that ministers and members of the press who do not typically have much exposure to the contractor industry also understand this and do not start making snap judgments based on outlying cases.

The PCG were quick to state that they fully supported HMRC investigating individuals who have not paid the level of tax that they should have, but that they were concerned over the tone and nature of some of the reporting in the mainstream media.

PCG’s Chris Bryce warned against populist attacks asking media outlets “not to create an orchestrated witch-hunt” against the nation’s micro businesses – specifically limited company contractors.

The source of the outcry regarding Mr Lester was primarily due to his role as a public servant in the middle of a financial crisis. This concern was further exacerbated when a mainstream newspaper reported that up to 25 officials from the department for health could also be increasing their salary through operating via their own limited companies.

Trust issues were stretched even further when in December the Department of Health denied that any workers were paid in a way that may reduce their tax bills.

The Guardian even reported that when faced with a parliamentary question on whether DoH staff received pay as limited companies, the civil servants discussed the possibility of getting round the issue by not responding.

The Guardian included emails by the civil servants cautioned saying that whoever does respond that, “The department would probably want to avoid anything that implies its NPW [non-pay-rolled workers] are disguised employees”.

As we are now into the final few weeks before the IR35 forum concludes their revised approach to the legislation it would be a shame if the nature of these articles were to influence the outcome.

Over the past week Moira Stuart (the newsreader) and Ex-Mayor of London, Ken Livingston have been under scrutiny for their tax affairs. Moira Stuart for her advertising appearances for HMRC (peculiar twist). However, as she was not employed by HMRC it is difficult to see how this could possibly be viewed as disguised employment; more likely fuel for the media fire.

The Freelancer and Contractor Services Association have sent letters to 90 MPs asking them to tone down the “strong” rhetoric against personal service companies for precisely this reason.

This all heightens the importance of getting the IR35 legislation approach right. There will unfortunately be individuals who manage to slip through the net and some of them will later be caught and exposed. The focus of IR35 investigations has to remain on high-risk groups in order to get the most from the available resources.

The contractor community make a very significant contribution to the economy and without them many businesses would often find themselves outsourcing to larger, specialist agencies at higher rates. For the sake of the economy the one-person limited company must be protected.

There will be both live webinars and pre-recorded presentations in the series.

The live webinars will last 30 minutes and then will have 30 minutes for specific questions from the attendees.

Initially they have planned 6 topic areas:

• Business expenses and capital allowances
• First steps as an employer
• The Construction Industry Scheme
• Self Assessment online
• Limited companies, an overview
• How VAT works

The series started on February 9^th

To take part in the webinars you will need to register first, this is straightforward; just click on one of the links below and you will be taken through the process and will be emailed a link to confirm your registration.

After the webinars have taken place they will be posted up on HMRC’s website.

Here are the list of dates and times for the forthcoming webinars:

You, Self-employment & HMRC

9 February 9:30am – https://www3.gotomeeting.com/register/919848286 (Opens new window)
10 February 14:00pm – https://www3.gotomeeting.com/register/322179510 (Opens new window)
13 February 9:30am – https://www3.gotomeeting.com/register/663061822 (Opens new window)
16 February 16:00pm – https://www3.gotomeeting.com/register/179459262 (Opens new window)
21 February 15:30pm – https://www3.gotomeeting.com/register/834325342 (Opens new window)
24 February 9:30am – https://www3.gotomeeting.com/register/564843518 (Opens new window)
28 February 16:00pm – https://www3.gotomeeting.com/register/432100470 (Opens new window)

Business Expenses & Capital Allowances

9 February 15:00pm – https://www3.gotomeeting.com/register/749157622 (Opens new window)
15 February 9:30am – https://www3.gotomeeting.com/register/456824982 (Opens new window)
17 February 11:00am – https://www3.gotomeeting.com/register/908493646 (Opens new window)
20 February 13:30pm – https://www3.gotomeeting.com/register/360185366 (Opens new window)
22 February 16:00pm – https://www3.gotomeeting.com/register/386692134 (Opens new window)
29 February 9:30am – https://www3.gotomeeting.com/register/321105150 (Opens new window)

Ltd Company – An Overview

16 February 10:00am – https://www3.gotomeeting.com/register/374221638 (Opens new window)
20 February 11:30am – https://www3.gotomeeting.com/register/184215054 (Opens new window)
24 February 14:00pm – https://www3.gotomeeting.com/register/871322742 (Opens new window)
28 February 9:30am – https://www3.gotomeeting.com/register/409807414 (Opens new window)

First Steps As An Employer

22 February 11:00 am – https://www3.gotomeeting.com/register/882734494 (Opens new window)
23 February 14:00pm – https://www3.gotomeeting.com/register/951955326 (Opens new window)
27 February 13:30 pm – https://www3.gotomeeting.com/register/630561782 (Opens new window)

Construction Industry Scheme for Contractors

23 February 10:30am – https://www3.gotomeeting.com/register/801290510 (Opens new window)

Construction Industry Scheme for Subcontractors

27 February 9:30am – https://www3.gotomeeting.com/register/824983438 (Opens new window)

How VAT Works

17 February 14:00pm – https://www3.gotomeeting.com/register/425918230 (Opens new window)
21 February 9:30am – https://www3.gotomeeting.com/register/838791414 (Opens new window)
29 February 12:30pm – https://www3.gotomeeting.com/register/589760454 (Opens new window)

Having seen this I thought that it would be helpful for Churchill Knight & Associates Ltd readers if I checked on other webinars and training events regarding tax and for general contractor questions.

There seems to be a bit of a gap in the market here, but I did find a few:

Lexis Nexis run quite a few tax related webinars and training events:

http://www.conferencesandtraining.com/en/Browse-Events/tax-conferences/

Additionally the PCG have a calendar of events for contractors, these are not all run by the PCG so there may be a range of providers events featured:

http://www.pcg.org.uk/cms/index.php?option=com_jevents&Itemid=1270&catids=780

Again, slightly off course here but a good resource all the same for contractors and small business owners Ecademy run boardrooms where you can meet face to face with a team of local professionals to give each other advice and support on a monthly basis:

http://www.ecademy.com/module.php?mod=club&op=bb_about_page

As a contractor there will always be an element of doing things for clients, which are “off the clock”. There are some clients who expect, or at least take up, a far greater amount of a contractors time than they should.

This makes them less profitable (or unprofitable) clients to service; unless of course you can explain this to them and they are happy to pay for the higher level of service.

I am talking about the type of client who has an email ready and waiting for you when you get up as well as one to keep you occupied late at night. One who is keen to catch up about their project on a daily basis even though you are only working 8 hours a week for them.

So what can be done about clients that become more trouble than they are “financially” worth?

The first step should be to try and make the relationship and the communications less frequent, more specific and more productive.

If you are receiving too many emails and calls then it may be an idea to ask the client to agree to a weekly call, which has a clear agenda and is time limited.

You could then follow up the call with an email outlining what you are working on and when, so that the client is clear on what is happening. This organised format of communications will in most cases make the relationship clearer and will encourage the client to leave you alone to get on with your work.

What if this doesn’t work?

If after trialling a new way of communicating with your client, things just fall back into their previous pattern and you feel that you are losing money on the client then you need to consider a few different things about them:

1)  Have they ever referred you to anyone else?

2)  Are they an active social media user that helps to raise awareness of you and your business?

3)  Would the customer be of value to your closest competitor?

4)  Is there a way that you could make the relationship profitable for you and also more beneficial to the client?

If the answer to all of the above is “No”, then it is perhaps time that you thought about terminating your relationship with the client. This should be a last resort as it could have a greater impact than purely the financial loss of their business, for example, if they decide to publicly criticise you for poor customer care.

If you answered “Yes” to any of the above then there is a chance that things can be turned around and you should make an effort to do so prior to considering terminating your relationship.

If you have got to this stage then there is nothing to lose in being frank and honest and just explaining your position objectively to your client. People are generally fair and considerate so this could lead to a resolution.

It would be great to hear some stories of how others have dealt with this situation. Please leave your story in the comments below.

Much of the debate so far has centred on the targeting for investigations.

One thing that has been stated by HMRC is that they intend to start looking at a contractors business in totality rather than simply on a contract-by-contract basis in order to determine candidates for investigation.

Of course, the law still remains unchanged and contractors must be compliant on all contracts. HMRC are just saying that in order to focus their resources to best effect they will consider the bigger picture when identifying who to investigate and before engaging in an investigation.

HMRC typically look at all contracts going back 6 years and consider both the terms of each contract as well as the practical working arrangements.

There is talk of a new process, which will start with HMRC sending thousands of contractors questionnaires. Presumably, they will only be sent to those contractors who have already been identified as being in the higher risk sectors. Then, dependent on how contractors respond to these questions an investigation by HMRC may or may not commence based on the perceived risk of one being inside or outside of IR35.

In some cases, where the response to the questionnaire is clear in showing that the contractor is in business on their own account, then this will help the contractor to develop a low risk profile with HMRC. However, the answers could also result in the contractor being determined as medium or high risk and therefore more likely to receive further investigation.

The postponed January meeting of the IR35 forum took place this Tuesday (21^st Feb 2012) so once the minutes are published then we will hopefully be able to give some clearer direction on where this is going.

We suggest that anyone who is operating outside IR35 Speak with an independent tax status advisor to review your IR35 status. Churchill Knight & Associates Ltd will be able to point you in the direction of an independent tax status advisor.

If you have any specific questions regarding IR35 then please just leave a comment below or give us a call if you would like to remain anonymous.

The bill for stands at £158 million. Unsurprisingly Reed have asked for a judicial review of the decision.

As a potted history of the case: In 1998 Reed decided to make a number of its temps who were working within several of its staffing agency subsidiaries into full time employees. At the time Reed were advised by Robson Rhodes, a partnership of chartered accountants who were bought out by Grant Thornton in 2007, that they may be able to benefit from a relaxation in the rules on travel and subsistence expenses which would allow them to offer a salary sacrifice scheme to the employees.

Reed employees were given the option of joining the Reed travel allowance scheme where they would receive a lower level of gross pay, but would gain through a tax-free scale payment based on where they worked and how they got there.

The crux of the case is the definition of a temporary worker in relation to a temporary assignment. From HMRC’s point of view, although the temp workers were only employed for the duration of each assignment, the workplaces amounted to permanent workplaces for the duration of each assignment. This means that ordinary commuting costs were not deductible.

It is also worth noting that Reed benefitted through this in terms of income tax and National Insurance Contributions.

One of the key reasons for the decision by the tribunal to side with HMRC was that the employees hardly received any of the benefits of the scheme, whilst Reed made large savings through it.

The judges stated that:

“Far from providing a benefit to the employed temp, [Reed] appropriated a significant part of the saving to itself; and the supposed sacrifice, however it was presented, was no more than an arithmetical adjustment whose purpose was to ensure that Reed secured the intended share of the benefit. It was not, in our view, a sacrifice in the true sense of that word.”

A further deciding factor was the consideration of the status of the workplaces “were they temporary or permanent?”

They found that Reed had a contract of employment with its agency staff, but the judges believed that the contracts did not extend to periods when particular assignments had ended.

The judges stated that Reed were under an obligation to find opportunities to work for the staff, which temps could decline. However, they found that Reed exercised no control over the temps when they were between assignments and the contracts lacked specific and necessary detail.

“While we accept that there was a contract of some sort when the employed temp was not on an assignment, it was not a contract of employment” they concluded.

Now the case will go for judicial review following Reed’s expressed dissatisfaction with the decision by the tribunal.