Finance and Business Blog

Contract workers who take the wrong advice from High Street accountants could find themselves thousands of pounds out of pocket according to a survey carried out by specialist contracting firm Freelance World.

According to Alasdair McGill, managing director of Freelance World:

“We have been genuinely alarmed at the poor advice being given by some firms to prospective clients. It is like going to a GP for treatment when you really need to see a specialist consultant. It is quite clear that many High Street accountancy firms simply do not have the expertise to advise contractors on key legislation, compliance and management of their specific requirements.”

“One responder told us that IR35 had ‘died a death’. That kind of advice could cost a potential client a lot of money and years of credit problems, this is because since the 2009 Budget, HMRC can now place people on a tax avoiders’ blacklist for non-compliance.”

“The only option these firms seemed to offer was to set up limited companies for contractors, which is sometimes not the ideal option. Not one suggested options such as using an umbrella company or going PAYE. This is fundamentally against the MSC legislation, which has to be considered by all potential one-person limited company contractors.”

“I believe it is simply because the High Street firms plainly do not understand the legislation and as a result are failing to give the correct advice.”

“What these firms should be telling their prospective clients is that IR35 work should be handled by an employment law specialist who has a detailed understanding of this area of taxation, not telling them that it is nothing to worry about. Accountants should not be issuing advice on IR35 unless they have real experience of employment status and are confident about defending their clients in front of the tax tribunals.”

“Freelance World is also a registered accountancy firm, however, we understand that because we deal with contractors amongst our other clients we need to be fully aware of this legislation and have undergone three third party audits to ensure we are one of the most compliant businesses in the market. Our researchers found that there are a number of firms in the north east who may not be compliant, which is bad news for their clients.”

“Most contractors do not understand the legislation that governs them as freelancers and contractors as much as they should and that is why it is crucial they get the correct advice. The ultimate consequence is that they could end up with a huge charge from HMRC or appear on a credit blacklist.”

Earnings Tracker - FREE Accounting and Bookkeeping Software Tool for Contractors and Freelancers

Google has just announced that it hopes that by the middle of next year (2010) it will have an operating system (Google Chrome OS) running on netbooks. The plan is that the operating system will be further developed so that it can at some stage in the near future also run on PCs.

This is a bold move, and represents the first real challenge to Microsoft’s dominance of operating systems for a long time. Microsoft currently has around 90% of the operating system market and dethroning them will be a tough nut to crack.

What Google has said is that all of the operating systems around today started life before the world wide web, and as such were never designed for the way we use computers today. Google hopes that by developing an operating system that is designed purely for the web, it will remove such problems as viruses. 

Google does of course already have an operating system for mobile phones called Android, so they do have some experience in the market. They also have a range of web-based applications, which they claim are being used by 1.75 million companies.

Stephen Shankland at CNET said the move had widespread implications.

“One is that it shows just how serious Google is about making the web into a foundation not just for static pages but for active applications, notably its own such as Google Docs and G-mail.”

“Another: it opens new competition with Microsoft and, potentially, a new reason for anti-trust regulators to pay close attention to Google’s moves.”

Some commentators said Google’s motivation in all this was pretty clear.

“One of Google’s major goals is to take Microsoft out, to systematically destroy their hold on the market,” said Mr Enderle.

“Google wants to eliminate Microsoft and it’s a unique battle. The strategy is good. The big question is, will it work?”

Earnings Tracker - FREE Accounting and Software Tool for Contractors and Freelancers

Version 5.6 of Earnings Tracker will be released in August 2009.

New features:

• Users can now generate comma separated values (csv) files from reports.
• Bank Interest is now included in the VAT Flat Rate Scheme calculation.
• An option is now available to include ‘other revenue’ in the VAT Flat Rate Scheme calculation.

In April, the HM Customs & Excise stated that bank interest should be included as income for the purpose of the VAT Flat Rate Scheme calculation. Here is an extract:

For this reason, we have decided to update Earnings Tracker and include bank interest in the calculation.

We have also added a check box when adding or editing monthly bookkeeping figures, enabling ‘other revenue’ to be either included in or excluded from the VAT Flat Rate Scheme calculation.

Earnings Tracker - FREE Accounting and Bookkeeping Software Tool for Contractors