Success So Far…
The Freelancer & Contractor Services Association has already shown itself as a proactive force to be reckoned with and we’ve established ourselves as the authority on the professional freelance workforce.
Most recently FCSA has been working closely with the Department of Business, Innovation and Skills (DBIS) on the content of Agency Workers Regulations (AWR) Guidance. This crucial piece of legislation comes into law on October 1st 2011 and FCSA members are ideally placed to advise Agencies and Contractors on best practice that has compliance with the regulations at its core.
FCSA has also been working with the Office for Tax Simplification (OTS) with special interest in small business reliefs, IR35 and travel and subsistence expenses.
In 2008 we successfully lobbied Government when legislation was put forward to scrap subsistence and travel expenses tax relief for those employed by umbrella companies.
Professional freelance workers employed by umbrella companies have been allowed this tax relief in the past because they regularly have to travel to temporary workplaces, often scattered all over the UK. This balances the fact that if a permanent worker re-locates for work purposes, they can claim tax relief of expenses up to £8,000 via their employer.
As the leading trade association for accountancy service and umbrella providers, we engaged in consultations with the Treasury and our combined voice was heard and respected. We were able to put forward a solid case for our clients to protect their interests and successfully put a stop to the proposed legislation.
We predicted that, if expenses were deemed non-deductible, many workers in the high end of the umbrella market would no longer stay with UK service provider companies, but instead move to offshore structures and other schemes that do not comply with HMRC regulations.
Based on our research and HM Treasury’s estimates of the umbrella market, if 67% of those operating through umbrella companies moved to other structures, bearing in mind the reduction in tax take as individuals move from paying NIC/PAYE to potentially no tax at all, and subtracting the small amount the Treasury would save in not paying out this tax relief, we forecast the effective tax shortfall to the Treasury would be approximately £1billion.
HM Revenue and Customs will instead focus on improving compliance rather than introducing new legislation.
FCSA was originally formed with an aim to improving standards in our industry and we therefore look forward to working with Treasury and HMRC officials over the coming years to implement measures to achieve this goal. FCSA members stake their reputation on outstanding customer service and spotless compliance.
New legislation would have ended up with a net loss to the Exchequer, penalised the compliant end of the umbrella market and ultimately caused irreparable damage the UK’s vital flexible workforce. Fortunately, the Government listened to reason.
The members of FCSA have collaborated on initiating the first code of conduct for the service providers sector. This serves 3 purposes:
- it proves to regulators that we have strict standards and operate within legal guidelines;
- it shows freelancers that we are professional and trustworthy and;
- it reassures agencies and those engaging the services of freelancers that they are dealing with compliant accountancy and umbrella companies.
Under our code of conduct, FCSA members each undergo an independent review from one of the ‘big four’ accountancy practices, with the review documentation being voluntarily submitted to HMRC. This unparalleled act of open-book accounting in this sector proves our commitment to transparent and ethical practices, setting the standard for professional compliance and proving that we work legally and ethically at all times.