Ernst and Young Contractor Forum
On 2nd February I travelled to London to attend a forum for those operating in the contractor accounting sector, hosted by Ernst & Young. Whilst much of the content was focused on Umbrella companies and the impact of AWR (the consensus was that umbrella companies may not be with us for very much longer), there were a few points relating to contractors working through a Limited Company that I wanted to share.
First of all, E&Y stressed that MSC had not gone away, and although there have been very few cases under the legislation, HMRC are still keeping an eye on the sector. For the moment their focus is on the umbrella sector. However, contractors should ensure that they are compliant – something that all Freelance World clients can take comfort from due to the work we have done with KPMG and E&Y over the years.
There is also a very strong rumour that HMRC is planning to abolish the Flat Rate Vat Scheme, which most of our contractor clients benefit from. E&Y believe that they will not be able to do this due to some obscure law, however if that is the case then E&Y suspect HMRC will simply adjust the FRVS percentages to remove the profit opportunity.
Finally, E&Y spoke about offshore schemes. We’ve seen a couple of accountants hawking these around Aberdeen recently – they typically promise that you’ll be able to keep up to 82% of your income via these complex arrangements. HMRC are increasing their activity in this area, and unless you are genuinely a non-UK resident then expect to hear from HMRC if you’re using one of these schemes. With heavy fines & penalties being applied, the old adage that if it looks to good to be true, it usually is, seems apt here.