RBS latest bank to slash contract rates
RBS has imposed a 10% rate cut on the majority of its temporary and contractor workforce – around 11,000 people – as part of a major cost-cutting exercise. Those affected were informed on 17th April, and the cut takes effect from mid-May.
Contractors earning under £250 per day, and those working via consultancies are not thought to be affected by the cut.
Earlier this year, Barclays also announced a similar rate cut – the third such measure in the space of three years.
Responding to the news, contractors’ group, PCG, says that such blanket cuts could turn the financial sector into a ‘no-go zone for contractors.’
Chris Bryce, the association’s CEO, said: “Time and time again we have seen that the best way to deliver efficient, cost-effective IT systems in the long term is to invest. Inflicting a ten per cent rate cut on a couple of thousand contractors may look like it will save a few pounds now, but in reality it will end up costing a lot more in the future.”
New Managed Service Company risk for recruitment agencies
The parent company of Parasol and ClearSky Accounting, Optionis, says that recruitment firms could inadvertently fall foul of the Managed Service Company (MSC) rules whilst attempting to comply with new false self-employment legislation.
According to Jeff Blakemore, a director at the firm, following the implementation of the onshore employment intermediaries rules, recruitment agencies are storing more detailed information about the limited company contractors they place on assignment.
He explains that “by demanding that accountancy providers hand over information such as a contractor’s National Insurance (NI) number and the hours they have worked, an agency could inadvertently trigger the MSC legislation and eventually be hit with an unexpected tax bill by way of debt transfer.”
The problem arises when one company holds a fairly detailed level of information about another company – and then passes this information onto a third party, this could indicate that a Managed Service Company arrangement is in place – according to HMRC.
According to Blakemore, it is increasingly common to hear of recruitment agencies and accountants attempting to exert a certain level of influence over their limited company clients – actions could potentially “act as a red flag for HMRC.”
Under the MSC Legislation, which was implemented in 2007, if an individual is deemed to be working via a company effectively controlled by another, then full PAYE and National Insurance Contributions will become payable on their entire income.
Worryingly for agencies who have placed such individuals on assignment, if any such taxes remain unpaid by the individual, then the debt can be transferred to the recruiter – if they actively facilitated the contractor to use an MSC scheme.
Poll reveals common freelancer stereotypes
A survey carried out by Crunch Accounting found that three-quarters of freelancers feel they aren’t taken seriously enough by big businesses, and that many of the long-held stereotypes remain.
The most common stereotypes revealed by the poll are; ‘all freelancers works in their pyjamas’, followed by ‘freelancing is for people who can’t find full-time work’, and ‘freelancing is a stop-gap’.
Tellingly, despite these stigmas, the majority of respondents (59%) said that they would never swap freelancing for a permanent role – even if they received a hefty pay rise in return.