The recent Supreme Court judgment in Autoclenz Ltd v Belcher and Others (UKSC 41) backed a group of self-employed car valets who worked for Autoclenz and argued that clauses in their contracts did not reflect their actual working arrangements. In spite of clauses on mutuality and substitution, the court ruled that they were obliged to provide the services personally. The legal dispute started in 2007.

The Supreme Court decision establishes a precedent that the conduct of the contractual parties could override the written terms.

In its ruling the Court said decided that the contracts did not reflect the true agreement between the parties and that in reality “four essential contractual terms were agreed: (1) that the valeters would perform the services defined in the contract for Autoclenz within a reasonable time and in a good and workmanlike manner; (2) that the valeters would be paid for that work; (3) that the valeters were obliged to carry out the work offered to them and Autoclenz undertook to offer work; and (4) that the valeters must personally do the work and could not provide a substitute to do so.”

This case highlights the importance for all parties to ensure that they have seen the contract of services and agree that it reflects the true working practices of everyone involved. The court stated that only one party needed to claim that a clause in the contract did not reflect their intentions in order for the clause to be considered a sham.

If you have any self employed people contact us today to ensure that your current arrangements reflect this new opinion, on 0800 917 9176

Elaine Richardson, a self-employed IT contractor working through her own limited company, ECR Consulting,  for Vertex Data Science was facing an IR35 bill in excess of £50,000 but in the latest IR35 Judgment  HMRC have been thwarted again.

The defense in this case stated that this case goes to prove that contracting through a single person limited company is a prudent and sensible method of providing freelance services, and not just about disguising employment.  The Tribunal found “it is clear to us that ECR is a genuine business and therefore not a target of the IR35 legislation.”

EICG are offering a menu of Construction Industry Scheme (CIS) reviews for your company at special rates until 30 June 2011

HMRC are being very proactive in this area, even for companies that have previously been under the radar. You could be caught out whether this be via an employer compliance review, an employment status review or an in year business records check. The costs of getting things wrong can be monumental, not just the penalties but also the time taken out of your business and the resulting stress that this can cause.

So why wait, choose your review option below and contact us today on0800 9179176 begin_of_the_skype_highlighting 0800 9179176 end_of_the_skype_highlighting

• Employment status review of your subcontractors and associated paperwork
• Review of all aspects of your Construction Industry compliance
• Business record checks
• Full Employer compliance review, as HMRC would conduct them

Make your company the one that HMRC walks away from rather than feasting on your hard earned profits.

In order to maintain the confidentiality of a contractor’s monthly return HMRC have introduced further security checks to ensure that the corrections made are proper to a particular return and that the revised details have been recorded correctly.

What does this mean?

If you telephone the CIS contact centre you may be asked for other details shown on the original return that now requires amendment. You should therefore ensure that you have a copy of the original return before making the phone call.

If you send an amended return to Netherton then you may be contacted by the CIS centre in Newry asking you to confirm the period to which the corrections/additions relate.

If you write a letter to the CIS centre in Newry, once again you may be contacted either by telephone or in writing asking for confirmation of the amendments.

Very quietly HMRC have announced that there is a new CIS penalty regime being brought in.

From October 2011, the penalties for late or non-filing of a contractor’s monthly return within the Construction Industry Scheme are changing.

The first return falling within the new penalty regime will be the return for the month ending 5 November 2011.

The following penalties will apply to that return and all subsequent months’ returns that are not filed or filed late:

• A fixed penalty of £100 immediately a return is late.
• A second, fixed penalty of £200, two months after the filing date if the return is still outstanding.
• If the return is still outstanding six months after the issue of the first penalty, a tax-geared penalty is charged which is the greater of £300 or 5% of the amount of deductions shown on the return.
• If the return is still outstanding twelve months after the issue of the first penalty, a further tax-geared penalty is charged which is the greater of £300 or 5% of the amount of deductions shown on the return. Higher levels of penalty apply where, as a result of the failure to file the return on time, information has been deliberately withheld.

Interest will be chargeable on any penalty paid late.

The legislation for the change is at schedule 55 Finance Act 2009.

Paragraph 13 of Schedule 55 to Finance Act 2009 introduces a penalty capping provision. The fixed penalties within the capping period will not exceed a maximum of £3,000. The capping period starts on the day of commencement (the date the contractor advises HMRC that they will first pay, or have first paid, a subcontractor) until the date they first file a CIS monthly return. Tax-geared penalties of 5% of the amount of deductions shown on the returns will also apply in the capping period where the return is submitted over 6 and 12 months late. There will be no fixed minimum charge of £300 when the capping period applies.

Mistakes can be expensive so contact EICG on 0800 917 9176 to find out about our Construction Industry Scheme (CIS) reviews

HMRC are now out and about big style as they have told their Inspectors to bring in as much money as possible, as quickly as possible, which is not really surprising given the current economic environment.  There will be pressure to settle long running full enquiry cases and Inspectors will be encouraged to take up aspect cases (these are as they sound, looking at a particular aspect of a business, eg employment status, entertaining expenditure etc ) which are likely to be settled more quickly to optimise the tax yield in the current fiscal year.

Interestingly, it would appear that the new “Cross Tax” enquiry framework, involving PAYE/NIC, Corporation Tax, VAT etc is being shelved as it is slowing up the enquiry process so Inspectors will be reverting to just working their particular area