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Tuesday, November 22nd, 2011

We’ve been working with freelancers, contractors and small business owners for many years now and although we all know there are lots and lots of benefits to running your own limited company, this time of year usually gives us a stark reminder of one of the downsides. Yes we enjoy all the freedom and control of working this way, but when you are sick and not working, then you aren’t earning.

Now a couple of days off with a cold, or a couple of weeks with full blown flu can be difficult enough as it is and unless you are fortunate enough to have a sizable war chest, a few weeks without work can lead to some sizeable financial challenges. And although it’s not a nice thought, if your family is dependent on you and your income, should the worst happen and you come down with something serious then the financial implications can be just as serious as the health ones.

One of the benefits of working with ClearSky Accounting is you can tap into the expertise of ClearSky Wealth Management so it may well be a good opportunity to give us a call for a chat. There are income protection products out there that will keep you financially covered should you be unable to work for whatever reason and they might be just the right amount of cover you need to give you peace of mind.

If you have any other tips or advice for your fellow contractors, feel free to post a comment below or on our ClearSky Accounting client LinkedIn group.

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Friday, September 23rd, 2011

It’s a theme that seems to come up a couple of times a year at the moment but it’s one that is always worth revisiting – the cost of getting things wrong.

A large number of contractors, freelancers and small businesses have turned to online accountancy software packages in order to keep business costs down. As long as you are experienced and confident that this can be fine but it can also prove to be a false economy.

HMRC recently issued a reminder about the fines and penalties faced by companies for things such as the late return of Self Assessment forms and late payments.

The changes come into effect this year and the costs can really mount up.

The new penalties for late Self Assessment returns are:

  • An initial £100 fixed penalty, which will now apply even if there is no tax to pay, or if the tax due is paid on time;
  • After 3 months, additional daily penalties of £10 per day, up to a maximum of £900;
  • After 6 months, a further penalty of 5% of the tax due or £300, whichever is greater; and
  • After 12 months, another 5% or £300 charge, whichever is greater. In serious cases, the penalty after 12 months can be up to 100% of the tax due.

New penalties for paying late are 5% of the tax unpaid at:

  • 30 days;
  • 6 months; and
  • 12 months.

Interest will also be charged on top of these penalties.

The tax return deadlines remain unchanged – 31 October for paper and 31 January for online returns. The deadline for paying any tax due also remains the same at 31 January.

Further information on the new penalties is available from the HMRC website.

So if you are doing it yourself make sure these dates are firmly etched on your brain and seek professional advice if you are worried about anything.

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Friday, December 17th, 2010

The Government finally sounded the death knell for Employee Benefit Trusts (EBTs) after the Finance Act 2011 was published last week, and it’s fair to say that the announcement surprised no one. HMRC has been quite aggressive in its language when discussing tax avoidance of late and the clamp down was expected, particularly so when you consider that the additional tax take for HMRC as a result is conservatively estimated at around £500 million a year.

And whilst EBTs had a place when those using the schemes were made fully aware of the risks involved and knew exactly what the scheme was and how it worked, thousands of contractors when facing investigation by HMRC, will have felt they were mis-sold to.

Contractor accountant companies such as ClearSky, and our sister umbrella company Parasol, have worked hard to raise standards and encourage best practice in the contractor services industry over the years. However, not all service providers shared this vision and this has ultimately been to the contractors’ cost. Not many will now shed a tear for EBTs.

There will be a large number of contractors looking at alternative options for running their business now as the clock ticks down to the implementation of the Finance Act in April and we’ve already had a large number of phone calls from contractors and freelancers asking us to explain the new legislation and discuss the options that are open to them.

We’ve been directing them to some of the online guides that are available as well so here is the link again for anyone who would find them useful.

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Tuesday, November 9th, 2010

It’s been flu jabs time again in the office recently and it got me thinking about one of the downsides to contracting – what do you do when you are ill and unable to work.

Read the rest of this entry…


Wednesday, October 20th, 2010

Amongst all the talk of defence budgets, public sector spending cuts and social housing budgets, the Government also announced proposals that could significantly impact on how we save for retirement last week. Read the rest of this entry…


Friday, September 3rd, 2010

There was a fair amount of scare mongering in the contractor press this week following reports that HMRC is to ramp up its inquiries into small businesses.

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Wednesday, July 28th, 2010

In the maze of information that is the IR35 legislation, contractors may well wonder where to start and how to go about assessing the law and what it means for them in practice. To this end, I’ve checked out some of the main sources of information and advice available over the internet and reviewed them for you.  Let me know what you think… Read the rest of this entry…


Wednesday, July 21st, 2010

Last Wednesday I saw an interesting programme on BBC 2 called ‘How to Beat Tough Times: Money Watch’. The programme discussed some key issues regarding the current economic climate and how the recovery is predicted to be worse than the recession itself and I thought it raised a few points that would be interesting for those looking to take the plunge and start their own business.

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Friday, July 2nd, 2010

The coalition government went live with its ‘Your freedom’ website this morning, to much fanfare and Deputy PM, Nick Clegg, doing the rounds of the BBC’s various breakfast broadcasts.

The purpose of the website is to give the British electorate the opportunity to feedback to government on which laws and legislations they would like to see changed or removed all together.

Some commentators and opposition politicians have approached the ‘Your freedom’ website with a great deal of cynicism but for those of us in the contracting world, in which IR35 has loomed large for over a decade, it could be the best chance yet of having IR35 abolished, or at the very least simplified with added clarity!

The PCG has been campaigning for some time now to have IR35 abolished, and it’s fair to say the results have been mixed. I’ve spoken about the legislation being a focus point of a lot of politicking during the last election and there has been conflicting messages about IR35’s future in the press in recent weeks.

What can’t be denied though is the fact that contractors would prefer to see IR35 abolished and replaced with much clearer and transparent legislation.

Well if that is what you want, I believe the Your Freedom website is the best opportunity yet for us as an industry to speak out and we should be mobilizing to do so!

The PCG currently has around 20,000 members. The FCSA, of which our sister company Parasol is a founding member, looks after the collective interests of over 50,000 contractors, and if encouraged to do so, that is a lot of voices calling for IR35 to be abolished, something that the government will be forced to pay attention to.

At the time of writing there are already of 10 separate threads on the Your Freedom website discussing the abolition or replacement of IR35, citing its debilitating effect on small business and enterprise and bemoaning the relatively small tax yield it has produced in return. We will be adding our voice to that list and encouraging the contractors, agencies and business groups we work with to do the same.

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Wednesday, June 23rd, 2010

Well the dust is settling on the new coalition Government’s Emergency Budget and having had some time to reflect on its impact on our clients, I’m feeling reasonably positive. Read the rest of this entry…


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