June 2013
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SPONSOR’S STATEMENT
Meet your obligations to comply with regs Liquid Friday managing director Phillip Venn says that working with trusted partners is essential to combat the plethora of challenges faced by the recruitment sector this year
RTI At Liquid Friday, we engaged early with HM Revenue & Customs (HMRC) to prepare for RTI, submitting test data to confirm the accuracy of our records. This exercise resulted in praise from HMRC as being one of the best prepared businesses in the region. Pensions auto-enrolment With a summer 2013 staging date from the Department of Work and Pensions (DWP), we have been putting our strategy together for pensions auto-enrolment since mid-2012. Surprisingly, the state’s offering via NEST [National Employment Savings Trust] actually came across as being very organised with good robust systems behind it and quality advice. We eventually settled for a solution with NOW: Pensions, whose offering will appeal to a wider cross section of our employees and implementation is going to plan with all of the necessary pre-staging communications being managed by the provider. IR35 Since its inception some 13 years ago, IR35 has never offered any absolute certainty to contractors and the introduction of the Business Entity Test last year gave no cast iron guarantees to contractors as to whether or not they are caught or not. The public case studies in Parliament, the BBC
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and the public sector put so called ‘office holders’ high on the agenda, which spawned the proposed Office Holders IR35 Rule. Conduct Regulations Agencies have also had to get their heads around the recent changes to the Conduct Regs, namely: retention of the opt out; the reduction of regulatory burdens for online recruiters and agencies; removal of requirement on agencies to agree terms with candidates and clients; clarity in advertisements; no reintroduction of a licensing regime; and the introduction of a ’reasonableness’ test for transfer fees and extended periods of hire. All in all, 2013 appears to provide the usual plethora of challenges and vague rules to all parties involved in the supply of human capital, but as always, this resilient sector will rise to the challenge and comply with their obligations. In order to do this, it is essential to work with trusted partners like Liquid Friday, whose attitude towards compliance is aligned with your own. I trust that you find the content of this supplement useful in facing this year’s dose of changes.
ANGUS THOMAS PHOTOGRAPHY
Welcome to this Managing Agency Workers supplement from Recruiter, focusing on an ever-changing backdrop of tax, employment and pensions legislation. Just as suppliers within the supply chain for temporary labour digested and implemented systems to cope with the Agency Workers Regulations, we had to commence preparations for the upcoming changes under Pension reform. While all of this was going on, a review of IR35 incorporating rules for ‘office holders’ was taking place and payroll teams across the country were having to make preparations for the eagerly awaited implementation of Real Time Information (RTI).
Phillip Venn, MD Liquid Friday
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EXPERT OPINION
Revoke or not to revoke: that is the dispensation!
E
xpenses dispensations are often used as part of a Salary-Sacrifice travel and subsistence arrangement by agencies looking to increase the take-home pay of their workers and reduce payroll costs.
There are also some important concessions to be achieved, particularly in relation to subsistence expenditure. That is why so many agencies that operate travel and subsistence schemes work extremely hard to satisfy Specialist Dispensation Officers based in Edinburgh that their processes are sufficiently robust to be awarded the coveted ‘badge of honour’. However, HMRC is becoming increasingly concerned about the cost to the Exchequer of such schemes, which allow temporary workers to claim tax-free expenses through the use of overarching employment contracts. In fact, HMRC has estimated that the cost of noncompliance is in the region of £250 million per year according to the consultation on ‘Tax Relief for Travel Expenses: Temporary Workers and Overarching Employment Contracts’, which was published in July 2008. It is therefore unsurprising that the Revenue has taken a hard-line on granting dispensations, making it extremely difficult to obtain an agreement and to retain it on a yearon-year basis. This is demonstrated by the fact that the specialist HMRC team reviewed 2,163 dispensations and dispensation applications in 2012 and astonishingly, 1,861 were either refused or revoked. Only 265 dispensations were actually issued. If a dispensation is revoked, HMRC could seek significant financial liabilities and request that the agency reconstruct annual P11D returns. HMRC has a wide range of powers to recover unpaid PAYE and National Insurance Contributions. These include the transfer of liabilities to directors where there
is sufficient evidence for HMRC to prove ‘on the balance of probabilities’ that the failure to pay was attributable to fraudulent intent or negligent conduct in failing to apply the terms of the dispensation agreement. The questions likely to be asked by HMRC to establish negligence would most certainly surround the administrative processes in place that ensure only qualifying expenses have been reimbursed. Once a dispensation has been revoked it is extremely difficult to re-instate. It should also be noted that an Officer of HMRC has the right to revoke a dispensation at any time with no appeal mechanism in place other than a Judicial Review of the decision in the High Court. UKPA Ltd has developed a Salary Sacrifice Audit Module, which is considered by many to be the leading expenses verification software available. The module will ensure that your expenses policy is administered correctly and will manage all your Benchmark Scale Rate audit requirements with the minimum of fuss - removing any concerns that your dispensation will be revoked on the basis of poor administration. In developing this module, UKPA met a number of its customers across the UK in a bid to understand individual requirements for a robust but equally flexible expenses verification system. A spokesperson for the company commented: “All of our customers were clear on one thing; security of the dispensation year-on-year is of critical importance. However, what our customers clearly didn’t want was an expensive calculator based approach which merely provides the numbers. What they requested was a competitively priced package, which managed the end-toend process from the dispensation agreement through to the claim and including the audit function. I am pleased to say that we were able to deliver it.”
If you would like to discuss how UKPA can help you achieve compliance and retain your dispensation, please call 0845 386 0200 or visit www.ukpa.com
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An HM Revenue & Customs clampdown on UK tax avoidance is said to be imminent, and recruiters and umbrella companies alike are wondering what the latest edicts will reveal. There is widespread recruitment industry and supplier support for toughening up the regime to provide a level playing field for all involved. Yet others argue with some justification that it’s clarity which is needed, and not more red tape. Would it not save everyone time, money and, in fact, likely net the government more tax money and National Insurance contributions to roll out the most specific guidelines possible to ensure everyone knows precisely what is expected once and for all? For the continuing march of requirements thrust upon recruiters and employers such as Pensions Auto-Enrolment and Real Time Information, technology that steps up to the myriad challenges is a major relief. Learn from the technology experts about all of the possibilities in our feature on ‘Cutting the red tape headache’. We hope this supplement will give you insight into what’s on the horizon and the solutions available to you, helping you to sort out the complexities of g g the modern dern workforce. managing
DeeDee D D Doke, Editor
Contents
6
Time for a tax clampdown The industry is seeking clarity following the public backlash surrounding tax evasion and avoidance
12 Cutting the red tape headache Software developers are coming up with solutions to the plethora of payroll issues surrounding managing agency workers
21 Directory Listings See a list of companies offering services
Scan here to get your own copy of Recruiter
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CONTRIBUTIONS Contributions are invited, but when not accepted will be returned only if accompanied by a fully stamped and addressed envelope. Articles should be emailed. No responsibility can be taken for drawings, photographs or literary contributions during delivery, transmission or in the editor’s hands. © 2013 Redactive Media Group. All rights reserved. This publication (and any part thereof) may not be reproduced, transmitted or stored in print or electronic format (including but not limited to any online service, any database or any part of the internet) or in any other format in any media whatsoever, without the prior written permission of Redactive Media Group. Redactive Media Group accepts no liability for the accuracy of the contents or any opinions expressed herein. The publishers cannot accept liability for any loss arising from the late appearance or non-publication of any advertisement for any reason whatsoever. ISSN 1475-7478
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Time for a tax clampdown PUBLIC MOOD MAY WELL HAVE DRIVEN HMRC TO LOOK INTO TACKLING TAX AVOIDANCE BY CONTRACTOR COMPANIES MORE ROBUSTLY. AS SCOTT BEAGRIE FOUND OUT, THE INDUSTRY IS SEEKING CLARITY
Tax evasion and avoidance, it seems, has never been such a hot topic in the UK. Whether it is the major public backlash against the low amount of corporation tax paid by global companies, furore over the use of legal offshore avoidance schemes by celebrities and wealthy individuals, or the more familiar refrains relating to questionable practices in the contractor services market, the subject is seldom out of the news. Little wonder then that HM Revenue & Customs (HMRC) is facing mounting pressure to tackle and outlaw such abuses and, accordingly, plans to further step up its efforts in this area.
One of its prime targets is National Insurance contributions (NICs) avoidance, as was outlined in this year’s Queen’s Speech. In short, new measures announced as part of the forthcoming National Insurance Bill are intended to create a general anti-avoidance rule for NICs and to restrict use of offshore umbrella companies as intermediaries. As Recruiter went to press, a detailed consultation document on the proposals was expected to be published by HMRC at the end of last month (May). John Chaplin, director of human capital at Ernst & Young, had advanced notice of and held discussions with HMRC about the consultation and although prevented
“Some of the amendments probably go further than is necessary and require disclosure of all information relating to the worker” Julian Ball Legal director, PayStream
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from revealing precise details, he expects it to “recommend some fairly radical measures”. He warns that if these proposals are adopted it “will place additional burden on employment businesses and their clients to understand what happens further down the supply chain, or pay the price for their lack of knowledge when HMRC discovers compliance failures relating to offshore arrangements”. Broadly speaking though, any initiative that aims to stamp out the aggressive offshore tax practices that potentially put everyone in the recruitment supply chain at risk has to be welcomed. And many umbrellas have expressed their approval of any measures that will curtail the surge in companies coming into the market offering high levels of take-home pay (up to 95% in some cases) while making little or no contribution to HM Treasury. “These are often complicated artificial arrangements backed up with a statement that a QC has expressed an ‘opinion’ that the scheme ‘works well’ and is fully compliant with UK legislation,” says Graham Jenner, director at accountancy services provider, NoPalaver Group. “We have already seen the Revenue deal with offshore benefit trusts and now other offshore schemes are being challenged.” Meanwhile, Lisa Keeble, managing director of ContractorUmbrella, reckons that anything that will “tidy up” and positively enhance the profile of umbrellas is to be encouraged and while it may bring added work, the end result will be worth any pain. “The more schemes out there that are offering exorbitant take-home pay, the less marketshare there is,” she says. “Those that are compliant may have to work that little bit harder but if it takes out of the market those that are bringing the industry down then all well and good.” She continues light-heartedly: “We’re quite used to filling in forms.” There is also a general consensus in the industry that it will level the playing
“There is no real need for new regulations because [HMRC] is not actually using the powers that it already has” Gary Butterfield MD, Zeva
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field and instil more confidence in the umbrella model among contractors and recruitment agencies. “If you’re an agency that takes compliance seriously and you are competing with a business that uses aggressive supply chain practices then how can that be a good thing overall?” asks Rob Crossland, chief executive officer of Optionis, whose group of companies includes umbrella firm Parasol. Crossland adds: “Anything that highlights such aggressive tax practices which in turn put end-clients, agencies and in some cases workers at risk has to be cautiously welcomed.” Still, it is important to exercise a degree of caution with any response to mooted changes to legislation. According to Chaplin, if the proposed legislation is enacted as planned in April 2014, it will have a “fairly wide-ranging impact on the use of service providers in the placement of temporary workers”. What is most likely to happen, he reckons, is that there will be a requirement to account for PAYE and NICs in full on anyone that is working in the UK, irrespective of where their employer is based. If PAYE or NICs aren’t accounted for in full then that liability will pass up the chain for both reporting the position and payment. “That means it is typically going to be the recruitment business that will take the first hit but also end-users could be in line to file a quarterly return to HMRC, which in effect says ‘this is where all of our employees are paid from and to whom it’s outsourced’.” With this in mind, Chaplin is calling on end users to bring additional pressure to bear on agencies to inform them of their arrangements and in turn for agencies to apply the same pressure to service providers rather than “turning a blind eye”. However, some service providers are critical of these latest proposals and consider that further legislation is unnecessary as they feel HMRC is already adequately equipped to tackle the issue. Gary Butterworth, MD of payroll outsourcing and umbrella company
“Anything that highlights such aggressive tax practices … has to be cautiously welcomed” Rob Crossland CEO, Optionis
Zeva, reckons the existing regulations on intermediaries could be used to tackle offshore models and recover lost NICs from host employers in the UK. “There is no real need for new regulations because [HMRC] is not actually using the powers that it already has,” Butterworth says. Lamenting the lack of “clear, unambiguous regulation” he instead accuses HMRC of relying on “propaganda and rumour”, and “labelling every taxsaving scheme, good or bad, as evasion. It doesn’t make it easier for us and it doesn’t make it easy for agencies.” Alan Nolan, senior partner at advisory firm Aspire Business Partnership, concurs that existing legislation relating to offshore intermediaries could be used to tackle the problem and that new rules will only serve to add further layers of complexity. He suggests that the proposed measures could form part of a wider attack on selfemployment. “I think this is a preventative measure by [HMRC] because it is concerned that, as it puts the squeeze on umbrellas in relation to expenses and allegations of tax avoidance, then the sector is going to move towards a self-employed model,” Nolan explains. “It is going to use the NI bill to ring-fence the possibility of people moving into self-employed models that are harder to investigate than standard umbrella models.” If, as Chaplin urges, agencies and endusers are consequently forced to apply more scrutiny across their supply chains, there is a risk that relationships will become strained. While exercising such due diligence will to some extent make this inevitable, it will be crucial to both
“The more schemes out there that are offering exorbitant take-home pay, the less marketshare there is” Lisa Keeble MD, ContractorUmbrella
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agencies and end clients making sure they remain on the right side of the law. His view is that if an agency places 100 workers it will need to know from its employment services provider “at a moment’s notice”, and on “a regular basis”, which payment model each worker is on, how many are on offshore schemes and receive confirmation they are paying full NICs on income received, if it is appropriate. Although the proposed legislation is probably some way off draft stage, it is anticipated that it will compel some agencies to revisit their contractual arrangements with all of their employment solutions service providers. Additionally, this could be further fuelled by HMRC’s move to use the powers it has under managed service company legislation to issue debt transfer notices to individuals and legal entities, including agencies, to recover lost monies. According to Julian Ball, legal director at PayStream, many agencies have already amended their contracts to ensure they have access to the information required to satisfy their clients. “Some of the amendments probably go further than is necessary and require disclosure of all information relating to the worker,” he explains. “This would catch things like CSA [Child Support Agency] payments which we wouldn’t disclose but this is down to overzealous lawyers trying to cover every eventuality rather than agencies actually wanting the information. A phone call is normally enough to clear this up.” Meanwhile, while some recruitment agencies may wish to make amendments, Jenner at NoPalaver issues a reminder that when operated by compliant companies, the umbrella is a “tried and tested” model and presents no risk to them. He adds: “It is a popular misconception that third-party debt transfer applies to umbrella companies. It doesn’t – it only applies to managed service companies – and even then recruitment agencies can put in place some simple procedures to ensure that they are not at risk.”
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31/05/2013 09:15
Managing agency workers 2013
Cutting the red tape headache SCOTT BEAGRIE LOOKS INTO HOW SOFTWARE DEVELOPERS ARE FINDING SOLUTIONS NOT ONLY TO THE AGENCY WORKERS REGULATIONS, BUT TO OTHER PAYROLL ISSUES SUCH AS REAL-TIME INFORMATION, PAYROLL SYSTEMS AND PENSIONS AUTO-ENROLMENT
The Agency Worker Regulations (AWR) are rather like the infamous Millennium Bug, reckons Phil Pickard, director of Rocket Software. While there was much fear, hype and scaremongering in the run-up to their introduction in October 2011, the legislation, which gave agency workers equal pay rights and conditions as permanent workers after a 12-week period, passed relatively quietly and without incident in the end. Nonetheless, the industry had a sharp reminder of the potential pitfalls of noncompliance earlier this year when two cases that had made it to court again put AWR in the headlines (see recruiter.co.uk). A case settled by the Public and Commercial Services Union (PCS) involving four
claimants who had been placed at Hewlett Packard’s print works near Blackpool by Kelly Services saw the workers gain a pay rise as well as increased holiday pay. Meanwhile, Monarch Personnel Refueling successfully defended a challenge from temporary workers of its use of a Swedish derogation contract. Rocket, developer of Temp ID which helps clients remain compliant with AWR, experienced spikes in its sales when news of the two cases broke, claims Pickard, while Roy Snart, managing director of First Choice Software, agrees that when rumours and scaremongering starts, it reminds people of the potential threat AWR is to their business. First Choice incorporated AWR management functionality into its RDB ProNet recruitment software that has helped ensure AWR is a “non-issue”
“There are a lot of different models out there, all of which need to be managed by the system and automated as much as possible” David Baldwin, MD, Working Pulse
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for clients, Snart says, but in the industry in general, he reckons many organisations are still ignoring it. “My guess is that many people have thought they will deal with the problem if it arises,” he says. Many organisations are still trying to manage AWR manually and via spreadsheets, which could yet prove to be a false economy and at the very least is unnecessarily adding to their workload.
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According to Snart, as a developer First Choice’s aim was to remove the headache and red tape associated with managing the legislation across its client base and therefore spread the cost of managing it for everyone. “We spent a long time looking at all of the various interpretations and what would happen if this or that was the case,” he explains. “We also made sure we had multiple clocks running on the
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same candidate from the start.” There are still many different interpretations of the legislation in use and whether an employer opts for Swedish Derogation/Regulation 10, pay-between-assignments (PBA) or goes straight into parity, whichever is chosen, without a precise picture of workforce activity, AWR will always represent a potential minefield to manage. David Baldwin, MD of Working Pulse,
developer of the eZworkforce workforce management software that enables agencies, umbrellas and corporates to manage AWR, says the company has introduced a large amount of flexibility around pay and charge rates to reflect the different interpretations of AWR. “There are a lot of different models out there, all of which need to be managed by the system and automated as much as possible,” he adds.
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Recruitment is
Developed by people who know recruitment RDB ProNet is developed by people with decades of front line recruitment experience who understand what small, medium and large recruitment companies want to achieve and have been helping them to achieve it since 1996. It’s because we understand your goals that ProNet has been designed to be a platform on which to build your business with usable workflows, ease of integration, customisation, compliance and security at its heart. If you’re a small business you’ll appreciate that ProNet will meet and exceed your needs out of the box and if you’re a larger business you’ll appreciate the fact that while all the standard workflows are covered – your own particular, perhaps, more complex or compliance needs can be easily catered for. Deeper integration, intuitive operation, exceptional user satisfaction, improved efficiency, reliability, easy customisation and larger profits. These are the benefits enjoyed by recruitment businesses using RDB ProNet.
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Going forward, Baldwin says the next focus is on ensuring its software can help clients cope with the other changes in legislation hitting employers, such as the introduction of Real-Time Information (RTI) by HM Revenue & Customs two months ago (April 2013). RTI means that employers have to report PAYE information to HMRC in real time, every time they pay an employee, and this includes temporary workers who aren’t self-employed. While this is dealt with by payroll software or a payroll provider, it has implications for anyone or any system involved in the capture or collection of employee data. “Because of RTI, some clients are using an additional section of the system which provides an authority to work ensuring a person has the correct documentation and the right levels of compliance,” says Baldwin. “Previously, a piece of information or documentation may have been deferred at the initial interview stage but RTI makes it much more important to get such information in place quickly.” Baldwin reckons the risk of failure to comply with AWR, RTI or any other regulation is perhaps at its highest in distributed companies and offices where there are disparate systems and processes. “There is a need to ensure central policy is followed and when disassociated systems are used or spreadsheets that don’t capture all of the necessary information, there is a gap between what head office wants and what is delivered on the ground,” he says. “We’ve concentrated on trying to give the management team the confidence that the software is going to enforce the policies of the company.” Following hard on the heels of RTI is pensions auto-enrolment, which means that employers must automatically enrol eligible employees on to a work pension scheme. Roll-out began for organisations with more than 120,000 employees last October and the staggered set of staging dates runs until 2018 (see the Pensions Regulator timeline for staging dates at bit.ly/autoenrolment-staging). For many SMEs, autoenrolment may seem some time away with businesses employing between 350-499
“Our development is underway to provide an enhanced report to show things relating to pension and auto-enrolment” Chris Bogh Technical director, Eploy
people assigned a staging date beginning in January 2014 and those employing fewer at intervals from there on in (firms employing 50-53 people have staging date of 1 April 2015). Most SME agencies are likely to fall into these latter categories but in addition to concentrating on their own permanent workforces, they may also be required to take into account temporary workers on their books whose earnings pass a certain threshold. Pickard describes auto-enrolment as the ‘AWR for 2014’ for many agencies and stresses it could represent as big an ‘unknown territory’ as when holiday pay was first brought in for temporary workers. Much like AWR there are currently a number of areas that need clarification. “For instance, there are grey areas over the three-month postponement period and how that would be managed for temporary workers,” says Pickard. “If you are an agency employing 100 temps, you are likely to struggle to manage auto-enrolment or else occupy a lot of your labour force to ensure you get everything correct.” While staging dates may be on a seemingly distant horizon for many companies, Pickard is urging agencies to look at the implications of the legislation sooner rather than later since they also need to be talking to pension providers, and typically, set-up times span seven months. The easiest route for many will be National Employment Savings Trust (NEST) but there are many other options. And whichever pension provider an agency or employer opts to go with, they will need some form of system with which to manage it. Some payroll software providers will help with this but not all and according to
“We spent a long time looking at all of the various interpretations and what would happen if this or that was the case” Roy Snart MD, First Choice Software
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Pickard, Rocket is considering the potential for developing some middleware that would help agencies to manage it. Either way, he reckons agencies need educating in this area. “Recruiters are focused on getting workers out there and ensuring they are compliant and auto-enrolment potentially drags them into yet more administration,” he says. “They will need someone to hold their hand through the process and that’s where we might jump in.” Elsewhere, Working Pulse is integrating with third-party suppliers for autoenrolment while Eploy is building a modified version of its AWR reporting functionality to help deal with it. “Our development is underway to provide an enhanced report to show things relating to pension and auto-enrolment,” says Eploy technical director Chris Bogh. “It’s more from a tracking point of view to show what salaries people are on and other relevant information and also to provide alerts.” Bogh reports that “no-one is panicking” yet about auto-enrolment but some clients are beginning to ask questions. “There’s sometimes a fine line between who needs to be worried about these things,” he says, adding that recent and forthcoming legislation places increased emphasis on ensuring that data captured is accurate from the outset. “For AWR, we export to payroll and it’s in our software at the beginning that information is captured on pay rates.” Data accuracy and integration is also important form a management reporting standpoint, Bogh continues: “Different systems might be reporting on different things so if we can pass data back and forth and combine reports they are all the more powerful.” Baldwin concurs that accuracy and consolidation of data which leads to better management reporting is key but points out that it isn’t only about ensuring compliance with legislation but making sure the company can focus on its core business. “You need a clean system which means you don’t end up constantly fire fighting,” he says. “Agencies and organisations need to concentrate on making a profit, not flushing it down the drain because they are spending 90% of their time correcting errors.”
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Keep looking forward we’ve got your back
In a fast-paced environment, you need to be sure that every part of your business is working as hard as you do. Poor back office performance can drain your time and resources, distracting you from your real passion – growing your business. InTime, our cloud-based mid to back office solution is specifically designed for recruitment agencies and integrates with all leading front office providers and finance systems. From timesheets and expense management, to payroll and billing, we can provide you with a hassle-free, cost effective solution. With Baker Tilly Revas’ web-based software, InTime, you will benefit from:
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Continuous development and system upgrades – driven by us
Scalable solution – suitable for small and large agencies, nationally or globally.
Let Baker Tilly Revas make your back office work for you, so you can focus your attention on what’s ahead. Charles Harrington Associate Director, Baker Tilly Revas Limited T: +44 (0)1284 772 500 charles.harrington@bakertilly.co.uk Baker Tilly’s full range of specialist recruitment sector services also include: outsourced pay and bill; outsourced accounting; corporate and personal tax compliance and advice; company structuring; share schemes; corporate finance; audit and business improvement services.
www.bakertilly.co.uk/revas Baker Tilly UK Audit LLP, Baker Tilly Tax and Advisory Services LLP, Baker Tilly Corporate Finance LLP, Baker Tilly Restructuring and Recovery LLP and Baker Tilly Tax and Accounting Limited are not authorised under the Financial Services and Markets Act 2000 but we are able in certain circumstances to offer a limited range of investment services because we are members of the Institute of Chartered Accountants in England and Wales. We can provide these investment services if they are an incidental part of the professional services we have been engaged to provide. Baker Tilly & Co Limited is authorised and regulated by the Financial Services Authority to conduct a range of investment business activities. © 2013 Baker Tilly UK Group LLP, all rights reserved.
An independent member of Baker Tilly International
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Managing a contract workforce Rising to the challenge by Alex Baines, Operations Director, Liquid Friday To be a part of the modern contract supply chain is to understand and recognise one of the most dynamic and economically important groups of workers in the UK. They’re also a growing community too, with over 1.6m freelancers in the UK, a very close second to Italy in terms of European standing. The productivity and effectiveness of a contract workforce is down to the companies and individuals understanding the issues, communicating effectively and working together. They are heralded by the UK Government to be one of the major contributors to economic recovery – so no pressure! The contract workforce is powerful and flexible but comes with its own unique challenges and legislation to be negotiated.
Variety is the spice of life! The contract workforce is made up of several different profiles of temporary worker, each with their own motivations, working styles, industries, financial priorities and attitudes towards their work life. Firstly there’s the ‘journeyman contractor’, who are usually experienced technicians or engineers contracting for a number of different clients with no plans to move into a permanent role.
‘Stop gappers’, are workers who have been made redundant, or lost their jobs in larger businesses. This type of contractor will work on temporary assignments until the job market in their sector picks up to enable them to secure a permanent role. We have also seen the rapid emergence and growth of the so-called ‘IPro’ - or independent professional.
These contractors provide consultative services, and specific expertise, to a range of businesses. They are classified as self-employed, many are Directors of their own private Limited Company, but generally have no aspirations to take on employees. We provide training for our channel partners, covering which models are available to which contractors and the benefits and pitfalls of each.
Disguised Employment
Compliance is Key
A lot of businesses have been relying heavily on temporary labour to support themselves out of recession, being able to quickly scale up or scale down as necessary. There are however some companies that have been accused of using a mainly contract workforce to reduce costs, for roles that should really involve full time employment.
It’s not always first on the agenda when developing client relationships, but perhaps it’s more important now than ever. HMRC may move slowly, but when they do ignorance is not a defence!
One thing’s for sure; employers need to be careful how they treat contractors and are often reliant on agencies for the boundaries. We’ve certainly noticed a rise in our agency clients asking questions around IR35, self-employed status and potential disguised employment.
All umbrella companies talk about compliance, but we’d urge agencies to probe a little deeper. If you haven’t got one, set up an approved supplier list with a comprehensive questionnaire and get copies of all of the supporting material, and any decision should be made on compliance, not how many high street vouchers a company is willing to offer.
Phone: 02392 883300 Email: info@liquidfriday.co.uk
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Don’t be afraid of Limited Company solutions Accounting is moving into the modern era Contractors usually have three choices when it comes to getting paid – PAYE, Umbrella or set up and operate their own personal service company (PSC). Each has their own merits, but for contractors looking for the biggest return on their income, there is one clear winner. Any person looking to take this route will need to consider a raft of legal obligations that come with being a Director of a Limited Company. Most of these can be handled by appointing an accountant to provide advice on the financial side of running a business, whilst also looking after quarterly tax returns and organising the annual filing of
accounts with Companies House. There are many options out there to help contractors with their accounting needs. Having a dedicated professional to provide guidance on business finances helps minimise the risk of errors, whilst freeing up more time for the contractor to do more important things, whether it is work or pleasure.
Bringing accounting into the 21st Century As a firm of chartered accountants, we specialise in services for anyone looking to run their own PSC. We offer a modern take on traditional accounting through the combination of an online accounting portal supported by unlimited access to a dedicated accountant. We guide contractors through the whole set up process, getting the Limited Company incorporated, helping them to open a business bank account and guiding them through how to use the online portal to run their business. Our system is also fully compliant with the new RTI legislation, communicating payroll information for each contractor directly through to HMRC each time payroll is confirmed.
Whyy add Boox to yyour PSL?
Add a trusted provider to your PSL Do you have a Limited Company provider on your preferred supplier list who works directly with you to look after the interests of your contractors, whilst ensuring the sign up process runs as effectively as possible?
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Chartered Accountant specialising in accounting services for contractors across all industry sectors.
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A quick and easy sign up process.
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Guaranteed company incorporation in less than 24 hours.
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Online storage of corporate documents enabling contractors to start work immediately.
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Agency Referral scheme.
If you are looking to add a Limited Company solution for contractors to your PSL, get in touch today.
02392 883338
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info@boox.co.uk
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EXPERT OPINION
PayMatters Striving for Excellence
P
ayMatters are already a market leading and Best Value Umbrella and Accountancy Service provider for both Contractors and Freelancers and are now looking to take the next important step forward. PayMatters offer UK based compliant Umbrella, CIS and Limited Company solutions and are APSCo accredited and Professional Passport approved. PayMatters are also business partners of the Institute of Recruiters (IOR). Mike Lee – Sales Director states “We have a very comprehensive and structured plan to grow our business in excess of 200% over the next 18 months. We believe that this is very achievable and in fact we are already well on track to do this. With the ever increasing challenges of legislative changes from both central and European government, PayMatters remain fully HMRC compliant and are poised with flexibility to support their clients and employees alike within this ever changing arena” Mike also states that he is delighted about Stewart Davis’ recent appointment as the Commercial Director of PayMatters and together they will strive towards excellence and growth. Stewart comes with over 20 years’ experience within the Recruitment and the Recruitment service sectors and states “he is excited about challenge and has a clear vision of the way forward. Stewart believes that the key to
successful growth and development will be in the tailored suite of solutions that PayMatters provide and in the customer relationships that we are building and fostering every day. If we support our clients from the bottom up and assist them in delivering a sustainable and profitable solution to their end user clients, we will in effect cement our own relationships” In order to start their campaign of growth both Stewart and Mike are embracing a full social media project launch and in order to increase physical awareness, they are holding a number of free seminars that will be held across the UK over the next coming months. These seminars aim to provide useful information and support for both PayMatters existing and potential clients on industry relevant and current topical subjects. PayMatters operate from their modern head office in Wilmslow, Cheshire and cover the entire UK with business development managers allocated to each region. PayMatters are now planning the opening of their London City office within Q4 this year and now also have a presence in Scotland. To this end PayMatters have already started to scale up their support operation and are now recruiting only the very best talent available.
For further information, please call 01625 546 610 or email mike.lee@paymatters.co.uk
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Back Office Contact details
T: 01260 280 290 F: 01260 276 969 Email: info@backofficesupport services.co.uk www.backofficesupportservices.co.uk
Back Office Support Services was formed in 1998 and is one of the most established and experienced Back Office providers in the UK. We have helped recruitment agencies prosper into successful, award-winning businesses by providing superb quality and exceptional service. Our greatest asset is our staff. Our highly qualified team is committed to delivering an unrivalled back office service to all our clients. We pride ourselves on delivering the highest quality service to every one of our clients and we have a strong philosophy for accuracy. Re-focus your sales team on revenue and wealth creation and leave the tedious, time-sapping administration to the specialists.
Baker Tilly Contact details
T: 01284 772500 Email: Charles.harrington@ bakertilly.co.uk Web: www.bakertilly.co.uk/revas
Baker Tilly Revas is a leading provider of web-based back office solutions and outsourcing services. Combining Software as a Service methodology (SaaS) with the skills and resources of one of the country’s leading accountancy and business services firms, Baker Tilly Revas is able to deliver innovative and comprehensive solutions for recruitment and staffing sector clients. In addition to the core functionality of contract management, capturing timesheets/expenses, e-billing, payroll, accounting functions and reporting tools that you would expect from a leading back office system, our cloud-based systems streamline processes, cut administrative time and costs and improve service levels to support client and worker retention and offer key differentiators for our clients when pitching for new business. So contact Baker Tilly Revas and let us help make your back office work for you.
Boox Contact details
T: 0808 168 0422 Email: info@boox.co.uk Web: www.boox.co.uk
Boox provides a fast and simple service for freelancers and contractors to administer a taxefficient business using a combination of professional advisers and cloud-based software. Boox provides their accounting services to contractors operating their own Personal Service Companies (PSCs). Boox has developed cloud-based software that enables self-employed contractors to incorporate their business, and allows the user to create and process invoices, record business expenses and manage their customers. It works out the company’s tax obligations, the registration and payment of VAT, and most importantly, calculates salary and dividend payments for the owner/directors. The software is also linked to their business bank account for speedy and accurate reconciliations to ensure the business is operating effectively.
Danbro Contact details
Tel: 0800 731 3178 Email: enquiries@danbro.co.uk Web: www.danbro.co.uk
Behind our award-winning accounting solutions for contractors and freelancers is a commitment to putting customers at the heart of everything we do. We understand that each person has individual financial needs and that the career of a contractor can change over time. That’s why we offer a comprehensive range of accounting services to ensure that whether your clients need an umbrella, limited company or bespoke service, we have the experience and expertise to deliver. We work to add value to the traditional recruiter – accountancy relationship, with our series of seminars and presentations covering a wide range of topics to keep you up to speed in the latest regulatory and best-practice developments. Our multiple accreditations also assure full compliance – giving you peace of mind and leaving you free to get on with what you do best.
First Choice Software Contact details
T: 01256 314600 Email: sales@firstchoice.org.uk Web: www.firstchoice.org.uk
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First Choice Software was founded by recruiters in 1996 to build and provide recruitment software to help recruitment companies achieve maximum sales from their consultants, while providing a great customer experience to their clients and candidates. Today the company is acknowledged as a market leader offering innovative solutions to progressive small companies as well as many enterprise clients. RDB ProNet is renowned for its usable workflows, ease of integration, customisation capability, compliance and security, and offers a choice of on-site, Cloud and hybrid solutions. RDB ProNet is a truly complete recruitment software technology platform. It has inbuilt support for Vendor Management, on-line timesheets, websites and web portals, iPhone and iPad apps and countless third party products including most common back office products and multi-posters. First Choice stands behind the flexibility, security and ROI delivered by its solutions.
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Managing agency workers 2012
Liquid Friday Customer service, compliance, accuracy and simplicity are at the very heart of what Liquid Friday
Contact details
stands for. We provide agencies with a front line payroll team to manage enquiries relating to pay Sam Pascoe Email: sam.pascoe@liquidfriday.co.uk and expenses, streamlining their back office process with innovative software. M: 07540 018396 We make the sign up process quick and easy for contractors, setting them up in as little as 5 T: 02392 883300
minutes, but explaining the umbrella to them in as much detail as is needed for them to understand how to make the most of it. Liquid Friday is an umbrella company that ensures both agency and contractor feel safe and secure, complying with HMRC guidelines at all times, and all at a very competitive price.
PayMatters Contact details
T: 08000 121 6513 Email: enquiries@paymatters.co.uk Web: www.paymatters.co.uk
We are a market leading and best value umbrella and accountancy service provider for contractors and freelancers. We are APSCo accredited and Professional Passport approved. PayMatters offers umbrella,CIS and limited company solutions to contractors. There are NO joining or leaving fees and there is one point of contact for all contractors and consultants – you will be assigned your own dedicated account manager. • £16.97 (net) weekly fee for all umbrella services • £20 weekly fee for our CIS solution • £31+VAT per week for our highest level of limited company accountancy service We are fully HMRC compliant from an employer’s and employee’s NI, PAYE and expense perspective
PayStream Contact details
T: 0800 197 6516 F: 0161 601 7842 Email: info@paystream.co.uk Web: www.paystream.co.uk
If you and your contractors are looking for real choice, innovative services and expert advice, you can count on PayStream. Our portfolio of services means that we can cater for all your contractors, regardless of industry and circumstance by delivering bespoke solutions rather than offering a ‘one size fits all’ service. We believe in offering real choice and a first class service, which is why over 90% of contractors asked, said that they would refer our services to a friend. Our hand-picked team of experts have over 30 years’ experience at the height of the legal and accountancy professions and our in-house legal and compliance team ensures that we work relentlessly to stay at the top of our game. We pride ourselves in keeping up to date with legislation and working with our advisors and HMRC to ensure we adapt to any changes in legislation quickly and effectively. This ensures that you and your contractors receive the best and most compliant solutions in the market, which is why we work closely with many different agencies, including most of the top 20 within the UK. For a friendly, straightforward approach that delivers maximum returns for minimum effort, you can count on PayStream.
UKPA A fully audited Expense Verification System is a prerequisite for any compliant Travel and Subsistence Scheme.
Contact details
T: 0845 386 0200 Email: info@ukpa.com Web: www.ukpa.com
Few agencies properly implement their expense policies in accordance with their dispensations or properly record and validate actual expenses, making them an easy target for HMRC. This can lead to enormous liabilities and penalties regardless of the legality of the particular scheme. UKPA provides independent implementation of your expense policy, making it easier to keep your dispensation or prove expenses claimed under an ‘actuals’ model. This ensures your mobile worker scheme stays within the law. UKPA’s Expenses Verification Service can be managed by UKPA or run by and branded as the agency.
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We know one size doesn’t fit all Ensuring you are working with a compliant provider is more important now than ever before. PayStream has always appreciated that what fits one contractor doesn’t always fit another. We’re one of very few providers that offer a full range of umbrella, limited company and CIS services and we’ll guide your contractors into what’s right for them, not what’s best for us.
PayStream promises: • Truly tailored advice • A range of services for all your contractors regardless of industry • Independently audited compliant services • Award winning customer service • Expertise to help you set up and manage a PSL For maximum pay, in the most compliant way, PayStream’s made to measure. That’s another reason to count on PayStream.
Call 0800 197 6516 e: info@paystream.co.uk or visit www.paystream.co.uk
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ukpa.com
Expense Verification System
T&S Compatible Works hand in hand with in house Salary Sacrifice and Personal Tax Relief schemes
Why pay thousands for just a Travel & Subsistence calculator? The UKPA EVS software manages the expense claim process from introduction and explanation, all the way through to auditing. We can even provide a T&S plug in at a fixed low cost to interface with your payroll software.
If you want to look after your savings and your dispensation, then give UKPA a call on 0845 386 0258.
Expense Explained
Expense Authorised
Your mobile worker scheme explained, in any language
Real expenses, real claims and in real time
Expense Recorded
Expense Audited
Eliminate confusion by simple qualification, expense entry and calculations
Complete audit procedure defined by your expense policy
Dispensation….. Granted UKPA.com T: 0845 386 0258 E: info@ukpa.com W: www.ukpa.com AWR.06.13.024.indd 1
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