Olympic flames doused

Posted on April 30, 2012 by DaveDavies

For many years now, we have had the argument that the Olympics will be a major boost to the UK economy. There is no doubt that is true in the main, but with just 100 days to go until the start of the games, construction agencies are now bracing themelves for a shock.

Our blog article going-for-gold-olympics-boost-to-the-london-jobs-market/ highlighted the fact that salaries for jobs at the London Olympics were standing at about 30% higher than the national average. As an example, construction site managers were demanding rates of around £310 per day on average.

Now though, it has emerged that all remedial and maintenance work on the London Underground, and at airports will be ceased for the 4 weeks before the Olympics start; the 4 weeks the games actually take place; and another couple of weeks afterwards. The situation will also be repeated for the Paralympics too a few weeks later. Two reasons are being cited for the cessation of works; the security risk and the fact that the tubes are running until 1.30am during the games which means there is no time to actually do the work required. It has also been cited that several large buildings on the route to the games will be shut down and potentially boarded up with advertising hoardings to make them more aesthetically pleasing.

We estimate that some 1,000+ workers operate in construction on the tubes daily and with clients now forced to suspend works for a month, it is highly likely that agencies will see a significant drop in demand for contractors, and many contractors will be forced into taking an unexpected holiday at the very time when holiday prices leap and the school holidays commence.

On the plus side though, the work still needs to be undertaken, so there is the suggestion that in the run up to July, more work will be undertaken to make up for the shut down, and that after the games, there will be another surge as they try and catch up on the backlog of work.

There does appear to be little doubt though that any agency engaged in rail work are faced with a ten week period of very little activity and several REC agencies have voiced their concerns about the situation. The Olympic legacy lives, but for many, July is going to be a very tense month.

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Widespread misunderstanding of UK tax system – by UK taxpayers.

Posted on April 30, 2012 by Jason

I interviewed 6 people on Friday afternoon for the purposes of making a few short videos for the YouTube channel.  What struck me was the apparent gulf in perception of how the UK tax system actually works and the reality.  My feelings are that as unscientific as a survey of 6 people is, I should carry out further research, so watch this space for updates.

For the time being however, here is a list of taxes, when they are paid, and where the money goes:

  1. VAT, Value Added Tax.  This is usually known as sales tax in other European economies.  It is a tax we pay on goods and services, currently 20% (Standard Rate).  There are some exceptions to protect the poorest in society so some of life’s essentials are exempt from VAT, most basic food (unprepared), books and children’s shoes to name a few.  Worth a mention here, women with small feet can get a significant tax advantage.
  2. Income Tax.  This is tax paid on personal income.  We all have an allowance (currently £8,105.00 per year) that we can earn before we pay any income tax.  Again this personal allowance is designed to encourage people to do at least “some” work.  Currently the coalition government’s stated aim is to increase this personal allowance to £10,000 per year.
  3. National Insurance.  There are 2 types of National Insurance.  Employees pay at a rate of 12% on everything they earn above £139 per week up to £817.01 where they then pay 2%.  Employers NI is paid at a rate of 13.8% on earnings above £136 per week.  Employee’s National Insurance is a tax on employment related earnings and Employers National Insurance is a tax on Employment.
  4. Corporation Tax.  Interestingly, a couple of people thought Income tax was paid on profits, however it is corporation tax that is paid on company profits.  There are various rates and allowances as well as ways of recovering tax on losses from previous years.  We won’t go into this detail now.
  5. Duty.  Another type of tax, a bit like VAT is duty.  Duty is paid on things resulting from international trade, like fuel.  Other things that have duty applied are alcohol and tobacco.
  6. Insurance Premium Tax.  This is simply a tax on hedging your bets.  Currently you pay 5% tax on anything that you insure.  You pay it to the insurer and they pay it to the government.
  7. Road Tax.  This is the tax you pay (on top of fuel tax) in order to be allowed to drive your car (or keep it) on a public road.
  8. Stamp Duty. This is a tax you pay for the privilege of buying a home in the UK.  Currently you pay 1% on any house purchase up to £250,000 and 3% on anything with a higher value.  There are some exemptions and limited companies that purchase property don’t have to pay.

None of the above are local taxes.  They are national taxes that are collected and submitted to the national government.  Contrary to popular belief, they are not all reserved for specific purposes.  One tax doesn’t pay for the health service and another for the armed forces.  All the money goes into one big pot called The Treasury.  From April next year there will be a new law, automatically enrolling employees into a company pension scheme.  The need for this law comes from the fact that our population is ageing and we need to be encouraged to save for our retirement.  This pension legislation will mean the employee pays a contribution as well as the employer.  It will be a bit like another type of national insurance contribution, but it won’t be referred to as a tax.

9. Council Tax.  This is a local tax paid to your local council and pays for such things as local police and law enforcement, public space maintenance like public parks and gardens, as well as rubbish collection and recycling.  Most councils will send you a statement to explain how much of your local tax has been spent in what area.

It is worth noting that the local tax is the only tax that is earmarked for certain services.

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Update on Real Time Information (RTI)

Posted on March 29, 2012 by Jason

According to Phil Nilson speaking at the payroll world spring conference, RTI will now go live next month with 10 employers in the pilot as opposed to the intended 300.  I have to admit that is seems sensible to let other employers iron out the creases before setting foot into this brave new world.

Another piece of news (to me anyway) is that RTI won’t be using the BACS channel straight away but one of 3 methods.  The Electronic Data Interchange (EDI) previously scheduled for obsolescence with this rolling out of RTI, software downloaded from HMRC’s website and the currently used government gateway.  However, it was made clear that the BACS channel is what is required long term and HMRC will be working to make this the mandatory method for submitting the information at some point in the future.

There are many fields in the Full Payment Submission (FPS) that will replace the p35 and p14’s.  You can see the fields here: http://www.hmrc.gov.uk/softwaredevelopers/rti/mig-rti-fps.pdf.  As you will see, it’s a lot of information that has to be in a very particular format.

When you look at the information required it becomes clear that moving to RTI will be the greatest administrative burden for the payroll profession so far, eclipsing the administrative burden caused by the likes of AWR or auto enrolment.

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Fuel crisis looming?

Posted on March 28, 2012 by DaveDavies

A vote for industrial action by tanker drivers means that almost 8,000 petrol stations across Britain face closure over the Easter period and the army could be drafted in to distribute fuel across the UK.

There are conflicting views on the support for the potential strike action. The Unite union, which represents the majority of tanker drivers, claims a turnout of around 70% from its members, whilst other sources claim that less than 50% of the Unite’s 2,000 members actually supported action with some 12% of its membership failing to vote.

Unite say that the dispute is “not about money” and instead cite “health and safety concerns” and “a slump in industry standards” since the likes of Esso and Shell have outsourced petrol deliveries. They argue that corners are being cut when it comes to safety training in a bid to squeeze profits and win contracts and that drivers are facing growing job insecurity. The Department of Energy & Climate Change (DECC) say the average salary for a tanker driver is £45,000 per annum, which is roughly double that of a regular haulage driver.

The Government has been urged to intervene and to act as a peace-broker in the dispute, but with the use of some 300 Army tanker drivers already being suggested, and comments by Ed Davey, the Energy Secretary, that “whatever action necessary” will be taken in order to avoid disruption, it seems almost inevitable that there will be some bitter arguments ahead and some comments will certainly escalate the tension further.

If the strikes cannot be avoided then the disruption would echo the fuel protests in 2000 when angry consumers and lorry drivers blockaded depots as a protest at rising prices at the pumps. At the time there was widespread condemnation that the cost of petrol had breached the £1.00 per litre mark – a rise which many people said would never be accepted. Now, a decade further on, the average price at the pumps has now reached over £1.40 a litre, or £6.27 a gallon with prices rising almost 3p per litre in just three weeks and there is every suggestion that prices exceeding £1.50 per litre aren’t too far away. Maybe it isn’t just the tanker drivers that should be up in arms and it’s time a message was sent out that enough is enough.

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Going for gold – Olympics boost to the London jobs market

Posted on March 20, 2012 by DaveDavies

Whether the London Olympics deliver a lasting legacy or not is still up for discussion but what does seem certain at the moment is that there is considerable upward pressure on salaries – at least for the short term – with people looking to strike gold this summer.

With salaries for jobs at the London Olympics up to a third higher than the national average, jobs board Adzuna reports a 300% increase in search traffic for Olympics-related roles in recent weeks.

Looking at all 2012 Olympics jobs, salaries average £27,248, 13% above the ‘regular’ national average, but within some sectors this figure is more than 30%.

IT professionals can take home an Olympic salary of £55k, according to Adzuna data, 36% higher than the national average of just over £40k, and security guards earning an average of nearly £19k elsewhere will see pay leap 38% to over £26k.

Translators should see their regular £32k/annum pay rise 32% to over £42k, while media officers and bar staff should find they are respectively paid 28% and 22% better during the games.

Best paid current Olympic job openings are locum consultant in emergency medicine (£397/day), commercial sports solicitor (£357), commercial finance (£317), contraction construction site manager (£310) and IT network engineer (£300).

Adzuna also reports that the 2012 organisers have guaranteed that all jobs will be paid at a minimum of £8.30/hour – the ‘Living Wage’ for London, higher than the national minimum wage of £6.08.

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Cost of living doesn’t rise for those under 21

Posted on March 20, 2012 by Jason

The increase in minimum wage of 11p to £6.19 per hour for those aged 21 and over must come as little relief, however marginal, but it beggars belief that the rate is frozen at £4.98 for those aged 18 to 20 and at £3.68 for 16 to 17 year olds.  The government policy makers must think that inflation in living costs doesn’t affect the young.

There will be some light relief as well for apprentices of a 5p per hour increase.

Just for the sake of clarity, employing someone at a rate of £6.19 per hour has a cost of £7.32 per hour based on a 40 hour week when you take into account holiday pay and employers national insurance.  Add to that the complex employment legislation SME’s have to deal with and the costs are somewhat higher.

Vince cable said: “In these tough times, freezing the youth rates has been a very hard decision – but raising the youth rates would have been of little value to young people if it meant it was harder for them to get a job in the long run.”

So is Mr Cable worried about the increasing cost of employment for the very young but not the cost of living at the same time as worrying about the cost of living for over 21’s but not so much the cost of employment?

A bizarre move indeed.

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Out in the cold – Neet’s left disenfranchised

Posted on February 28, 2012 by Jason

There are currently a million people not contributing in any meaningful way to the economic fabric of the UK.  Not through any fault of their own, these are the people not in employment, education or training otherwise known as Neet’s.

This particular sector of society presents quiet an obstacle for the government, with lower tax take on the whole they have less of our money to solve the problem.  So it is left to the private sector to at least attempt to go some way to help these people by providing opportunities for social mobility.  All that can be done is for private companies to be as open and honest about the hurdles that present themselves as young people embark on their working life.

Popular culture often measures success on the amount of consumer goods we obtain “Stuff”, especially in younger generations.  If you want “stuff” then you have to get “Greedy”, as the Daily Mash recently reported “greedy people have more stuff, say experts”.  It’s all about doing something proactive about the situation you find yourself.  The ideal job may not be just around the corner, it may be some way off but it certainly isn’t going to come to you, and neither is the “stuff”, so get out there.  You may envisage yourself as the CEO of a big corporation or the successful local businessman employing a dozen people, but you’ll have to start somewhere.  Richard Branson started with a van delivering records, and as for education, libraries are free.

What you need to do is the following:

  1. Write a cover letter explaining the contribution you wish to make.  Promise to be punctual, reliable, loyal and thoughtful towards the company or organisation that employs you.
  2. Find as many businesses as possible that are within travelling distance to you and send off your letter.  Make sure you’ve used spell check and had someone proof read it.
  3. Consider joining an Umbrella Company so you can consolidate a number of short term assignments into one employment where you can claim your travel expenses.
  4. Get your hair cut.  You have to look like you’ll be able to look after the business as best you can and that starts with looking after yourself, it’s all in the perception.
  5. Dress smart if you are job seeking, even if you haven’t got an interview, you never know when the call might come.
  6. Tweak your introductory letter slightly from time to time, use terms like Industrious, Diligent, Accountable, Attentive, Accurate, Enthusiastic and Motivated.
  7. When you finally get asked to interview (or maybe simply pop in) to one of the companies or agencies you have contacted, don’t be afraid to say to them you really want to work.  Employers love to hear that you want to work hard and make an impression.

It’s a tough old world out there and only the strongest are going to get ahead, but remember when you are measuring your success this old Canadian saying:

I don’t have to outrun the bear, I only have to outrun you!

This means you don’t need to be the best, you have just got to be better than the applicant behind you.

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Football playing a dangerous game?

Posted on February 17, 2012 by DaveDavies

In the current economic climate, it is probably quite right and proper that the Government focus its attention and resources on collecting tax where it is due. It is no secret that there are huge black holes in the Treasury’s budget which has implications for us all, regardless of which side of the political fence you sit. In the past couple of weeks, HMRC’s efforts to collect revenue has been as much of a story on the back pages of our newspapers as it is on the front pages and three high profile stories in the world of football have developed.

Firstly, we had the Harry Rednapp and Milan Mandaric trial for tax evasion. Both men were accused of failing to pay tax on a transaction of £180,000 between the two of them which they argued was a loan between friends for a business opportunity, rather than a bonus payment related to Harry Rednapp’s managerial position at Portsmouth FC. To the outsider, a high profile case, which is estimated to have cost £8 million to bring to court and which extended over a 5 year period, would appear to be an irresponsible waste of public funds – especially given that the tax liability would have only been around £50,000. Despite the failed prosecution, HMRC say they have “no regrets” about taking on the case. It is also clear that investigating so-called offshore ‘tax havens’ will remain one of HMRC’s top priorities going forwards. The fact that the CPS was willing to go after what was, in the football world, a relatively small amount of money, clearly demonstrates its appetite for prosecuting suspected tax evaders.

The not guilty verdict in the case certainly doesn’t mean that HMRC will soften their approach. Given the seriousness of the potential penalties, a very high standard of proof is demanded in criminal proceedings. This prosecution was fatally undermined by Redknapp successfully arguing that, if he really was conspiring to evade taxes, it wouldn’t have been worth his while doing it for such a (relatively) small amount of money. This was a basic flaw in the prosecution’s case and the jury evidently agreed.

We know that HMRC has been investigating the football industry for many years, armed with the idea that the prosecution of a high profile sports figure would act as a deterrent for anyone with undisclosed offshore assets. So, the publicity generated around this case has, at the very least, raised awareness of the issue of tax evasion to the ‘man on the street’.

The other two high profile cases involving HMRC this month centre on the administration of Rangers FC and Portsmouth FC.

In the case of Rangers FC, they were forced to appoint the administrators after HMRC pursued a case for £9 million in unpaid PAYE and VAT. This comes on top of another disputed claim of £49 million plus penalties, which could result in an overall £75 million bill for unpaid taxes. Part of the outstanding debt relates to the use of “disguised remuneration” schemes – Employment Benefit Trusts or EBTs, which have been used to pay staff of the club over a 10 year period. Rangers is by no means the only club to use such arrangements; in fact most of the Premiership clubs and many prominent UK businesses have used these structures. It would appear however that Rangers FC have failed to correctly administer the scheme and are now faced with a real possibility of liquidation.

Portsmouth FC have also entered into administration too, for the second time in the past three years. A demand for £1.9 million in unpaid taxes has been brought by HMRC which relates to two missed payments of £800,000 in the past couple of months. As well as this, Portsmouth are still paying off a £4 – £7 million bill for unpaid taxes from the previous ownership regime, so again the outlook for the club looks bleak at the present time.

In the cases of both Rangers and Portsmouth, there are suggestions that the fact that legal action has found its way into the media and on national TV, there has been some leaking of confidential customer information since all tax affairs are supposed to be strictly private and confidential. It has been suggested that Rangers will be taking legal advice on whether or not HMRC can be sued in this respect, but surely they have more important things to deal with at the present time.

The overall message for all should be clear. Make sure that whatever you do and whoever you deal with in respect of tax affairs, you always act in the most compliant manner possible. Cutting corners and turning a blind eye doesn’t work in the long run and no-one is beyond the reach of HMRC who clearly have a keen interest at the moment on clamping down on any breach of their rules. The same diligence in dealing with tax affairs should be demonstrated whether you are a top flight football club, a recruitment agency or an individual contractor.

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Are AWR rules resulting in some contracts being cut short?

Posted on February 1, 2012 by DaveDavies

It was meant to be a piece of legislation that protects the more vulnerable workers and ensures that all temporary staff receive the same employment rights and benefits as those enjoyed by their permanent counterparts. There is however already some evidence that some employers are beginning to cut short the temporary contracts of their freelancers and contractors to ensure that they do not work past the 12 week cut off. This in turn could lead to problems for temporary workers who rely on longer term contracts to maintain their standard of living and of course could open employers to claims of avoidance of the legislation, for which the fines can be £5,000 per breach.

As of October 2011, Agency Workers Regulations stated that temporary workers and contractors are entitled to equal employment rights as those in permanent contracts with the company after they have worked for the company for 12 weeks. This means they must come in line with permanent employees when it comes to pay and working conditions but also means that they are allowed to work overtime and take the same breaks and holidays as permanent staff.

Contractors who have already been in a position for a long time may find that their employer decides to offer them a permanent position to bring them into the permanent staff, however, a number of contractors have just found their contracts have been ended after only a brief time working.

When an employer hires a temporary worker to work on a project they benefit from a skilled professional who is only paid for the work they do and can be relied upon to work odd hours and days. There is no obligation to offer work every day and assignments can be cancelled with little or no notice, ensuring the employer enjoys total flexibility from their labour requirements and can therefore keep a close eye on costs. After the 12 week limit, these workers are then entitled to work the same hours for the same pay as permanent staff. It could therefore be argued that it makes more sense for companies to hire contractors for only a short period of time, or just to hire a member of permanent staff in the first place – although this would of course potentially increase headcount and budgetary spend which is not always what is required, especially if the employer’s work is of a seasonal nature or subject to other significant fluctuations of demand.

As it stands, contractors may be in for a tough time as both employers and employees adjust to the change in conditions and work out what this means for them in the long run. They should remain confident, though, as research has consistently revealed that contractors are amongst the most highly prized employees as they are well known for being skilled, efficient and good value for money. It is therefore not all doom and gloom for the contractor market.

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Insurance – Mandatory or merely advisable?

Posted on January 30, 2012 by DaveDavies

Making sure you are covered by all necessary insurances is very important for a contractor, but what insurance is actually necessary or mandatory, and which insurance is optional but often advisable? This simple guide to the insurance cover provided as part of the Bar 2 service should help to clarify the cover available. We are able to offer discounted access to four different insurances:

Employers liability cover

It is mandatory that all employees are covered by employers / employees liability cover. If an employee suffers illness or injury resulting from their work, the employer can be sued for compensation under their employers’ liability insurance. Cover of a minimum of £5 million is a legal requirement but with the Bar 2 Umbrella service, our employees automatically receive cover of £10 million – for which there is no charge.

Public liability cover

Public liability insurance covers any claims for awards of damages to a third party because of injury or damage to their property caused by you. Although not a mandatory insurance, if any member of the public or customers come to your premises, or if you go to theirs, then public liability cover is advisable. Cover of £1 million is automatically provided for every employee of the Bar 2 Umbrella and no additional charge is made. The situation is slightly different though for self-employed subcontractors who are engaged via CIS. In this case, we are able to offer discounted public liability insurance with £1 million cover if they don’t already have their own insurance in place, but a charge of £3.20 per week will be made for this cover. This insurance is charged separately because it is important that a self-employed subcontractor can demonstrate that he has made their own provision for insurance.

Professional Indemnity insurance

This protects you against a breach of contract (whether intentional or unintentional) that a client may want to sue for, as well as any loss of client documents, damage to or loss of client data and defamation claims. Owning this type of insurance means that, however unlikely it may seem, any negligence by you which could cost your business an extraordinary amount of money, or even the business itself, will be covered by the insurance and help you out of a difficult situation. All Bar 2 Umbrella employees are automatically covered by Professional Indemnity insurance cover.

Personal Accident insurance

Personal Accident insurance is an optional insurance that we make available to all Umbrella employees and to all CIS subcontractors. The cover provides for 24/7 worldwide cover against any accident or injury which may prevent you from working – and includes a death-in-service benefit, lump sum payments in the event of a permanent loss of limbs, and a significant element of income protection if you are unable to work for a period of time. The cover comes at a cost of £3.85 per week if taken (approximately £3.08 net of tax for a basic rate taxpayer). A recent claim from a Bar 2 employee resulted in a lump sum payout of £67,000 plus the provision of a retraining course when an employee lost an eye following an accident onsite.

If you do not already have personal accident cover and would like to know more, please contact us to discuss arranging immediate cover.

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