I think they may have overlooked the VAT issue. Difficult to see how they could say FHL are Vatable but not a business but who knows!
May be a bit of an own goal in that the potential VAT may significantly offset the additional income tax revenue, especially as FHL always had favourably NIC treatment.
the FHL trade does bring in a lot of revenue to the local economy in areas like where I live on the sunny south coast.
Fundamentally we have a very disjointed Housing system, from planning policy to a trades skills shortage etc and this is unlikely to scratch the surface
I think the future for 'Small Practitioners' is bright, most of us are just fed up with all the hassles, like the inefficiencies at HMRC for example. We are capable of doing as good a job as the bigger firms, when we get the time to spend with our clients.
We are constantly being advised the end of the world is coming for us. Compliance is dead. Go Niche. KPMG were going to take over the SME market place etc etc.
'The industry is attractive to private equity investors' for very good reasons.
Most clients, in most sectors are having issues recruiting, not just accountants. There is a general labour shortage and skilled labour is even harder to come by.
There are lots of potential factors.
Training people is costly in many ways. Some cannot afford to train staff or just choose not too. NLW / NMW have drawbacks as well as benefits. How do you afford to utilise a good member of staff to spend time training a Newbie when you are too busy?
Staff move jobs much more freely than historically, so when you do train someone up, they may leave, once they have fully trained and become increasingly valuable. Even if you have contracts to pay back exam fees etc, that does not pay for the time invested by other staff in giving practical experience.
The variety of work choices is huge. A lot of youngsters think they will become a You Tuber or an influencer. Pen pushing accountancy cannot compete!
A lot have people have a different outlook on life post Covid. Some have taken early retirement or semi-retirement
Brexit
There are so many reasons why a skills shortage, which to be fair had been looming for a long time, has been accelerated in the last few years and not just in accountancy.
However, as a result most other accountants that I speak to are too busy, if there is such a problem.
I never fully believed the doom merchants who have been saying compliance work is dead and that software / MTD will make us all redundant.
It will certainly be an interesting few years ahead whatever your view....
Incidentally I do like to train young people, we currently have 6 staff studying AAT because I remember that someone gave me a chance so I feel that I should do the same. (personal choice)
Whilst I have lost a few in the process, I now have 3 Managers who trained with us and have stayed and out of the 6 currently training I am cautiously optimistic about all of them.
My son has recently left school and he laughed when I asked if he wanted to come and work for me. He has chosen to do a course in the Construction Industry. Knowing the perils of training, I have asked a few friends and clients if he can do some Work Experience BUT without being paid. It is proving difficult to find someone because of H&S etc and they are worried if they do not pay him the NMW etc.
IR35 is a mess but the basic rules have still not changed, just the responsibility for any liability. HMRC do not have adequate resources to police IR35 properly and cases against taxpayers take ages to be resolved.
So they shifted the potential liability in 2017 and 2021 which had the desired effect of getting a lot of contractors into the PAYE system because the big organisations were too scared to sign off on allowing people to operate via a Limited Company, even though they were quite happy with this arrangement when the potential liability was not going to land on them. The basic IR35 rules did not change.
Now they are shifting the potential liability back to the 'subbies' again from April 2023. When IR35 was originally drafted, the liability was going to be that of the Main Contractor but they changed this very late in the day.
With the dividend tax now in place, the tax benefits are not as significant as they were previously and I do not expect all of those now operating under PAYE or an Umbrella will suddenly be desperate to set up their own company.
I think that we often overlook that, operated correctly there can be various other potential benefits of self employment other than just purely tax driven motives. In my experience a contractor has less time off when they know they wont get paid unless they turn up / do the work.
If they want the economy to grow, why not make everyone self employed?!?!
But I didn't say that you were wrong. Of course you are allowed an opinion, as am I, without you saying I am wrong.
I really don't disagree with the general content of the article itself.
I just made the point that there is also the context to consider, it was a very scary time, like no other I can recall.
You said that was "wrong".
It wasn't wrong.
The scheme was rushed out, which has caused problems. However on the flip side, it did mean that a lot of 'genuine' businesses survived that otherwise may have been forced to close, with all of the consequences that brings.
A lot of those genuine loans will get repaid. Those business owners will hopefully flourish, employ lots of people and pay lots of taxes.
The banks have processes in place to lend money in normal times, to avoid high levels of bad debt / fraud / etc. However, in Covid times, those processes were too slow.
I recall when the Government got involved in bank lending policy in @ 2008 - 2010 with EFG loans. A lot of money was lent then with a 'government guarantee' which was not repaid.
My answers
a
a
I think they may have overlooked the VAT issue. Difficult to see how they could say FHL are Vatable but not a business but who knows!
May be a bit of an own goal in that the potential VAT may significantly offset the additional income tax revenue, especially as FHL always had favourably NIC treatment.
the FHL trade does bring in a lot of revenue to the local economy in areas like where I live on the sunny south coast.
Fundamentally we have a very disjointed Housing system, from planning policy to a trades skills shortage etc and this is unlikely to scratch the surface
Tax avoidance is legal.
Tax evasion is not and should be punished.
Putting your money into an ISA is tax avoidance. Do you have an ISA?
If we change the historical principles, should we just not pack up and let HMRC tax everything from our clients and more?
The tax take is now extremely high. We need to encourage our clients to continue despite the current tax system not give HMRC more power.
I think the future for 'Small Practitioners' is bright, most of us are just fed up with all the hassles, like the inefficiencies at HMRC for example. We are capable of doing as good a job as the bigger firms, when we get the time to spend with our clients.
We are constantly being advised the end of the world is coming for us. Compliance is dead. Go Niche. KPMG were going to take over the SME market place etc etc.
'The industry is attractive to private equity investors' for very good reasons.
Absolutely spot on
There is no-one at HMRC with a bit of sense to see that this is totally absurd.
As usual nothing will happen, HMRC are totally above any law or recourse whatsoever.
Most clients, in most sectors are having issues recruiting, not just accountants. There is a general labour shortage and skilled labour is even harder to come by.
There are lots of potential factors.
Training people is costly in many ways. Some cannot afford to train staff or just choose not too. NLW / NMW have drawbacks as well as benefits. How do you afford to utilise a good member of staff to spend time training a Newbie when you are too busy?
Staff move jobs much more freely than historically, so when you do train someone up, they may leave, once they have fully trained and become increasingly valuable. Even if you have contracts to pay back exam fees etc, that does not pay for the time invested by other staff in giving practical experience.
The variety of work choices is huge. A lot of youngsters think they will become a You Tuber or an influencer. Pen pushing accountancy cannot compete!
A lot have people have a different outlook on life post Covid. Some have taken early retirement or semi-retirement
Brexit
There are so many reasons why a skills shortage, which to be fair had been looming for a long time, has been accelerated in the last few years and not just in accountancy.
However, as a result most other accountants that I speak to are too busy, if there is such a problem.
I never fully believed the doom merchants who have been saying compliance work is dead and that software / MTD will make us all redundant.
It will certainly be an interesting few years ahead whatever your view....
Incidentally I do like to train young people, we currently have 6 staff studying AAT because I remember that someone gave me a chance so I feel that I should do the same. (personal choice)
Whilst I have lost a few in the process, I now have 3 Managers who trained with us and have stayed and out of the 6 currently training I am cautiously optimistic about all of them.
My son has recently left school and he laughed when I asked if he wanted to come and work for me. He has chosen to do a course in the Construction Industry. Knowing the perils of training, I have asked a few friends and clients if he can do some Work Experience BUT without being paid. It is proving difficult to find someone because of H&S etc and they are worried if they do not pay him the NMW etc.
Our systems do not always help us.
IR35 is a mess but the basic rules have still not changed, just the responsibility for any liability. HMRC do not have adequate resources to police IR35 properly and cases against taxpayers take ages to be resolved.
So they shifted the potential liability in 2017 and 2021 which had the desired effect of getting a lot of contractors into the PAYE system because the big organisations were too scared to sign off on allowing people to operate via a Limited Company, even though they were quite happy with this arrangement when the potential liability was not going to land on them. The basic IR35 rules did not change.
Now they are shifting the potential liability back to the 'subbies' again from April 2023. When IR35 was originally drafted, the liability was going to be that of the Main Contractor but they changed this very late in the day.
With the dividend tax now in place, the tax benefits are not as significant as they were previously and I do not expect all of those now operating under PAYE or an Umbrella will suddenly be desperate to set up their own company.
I think that we often overlook that, operated correctly there can be various other potential benefits of self employment other than just purely tax driven motives. In my experience a contractor has less time off when they know they wont get paid unless they turn up / do the work.
If they want the economy to grow, why not make everyone self employed?!?!
Why Indeed!!
Employers are being asked to give employees the bad news about the NIC increase as well and put it onto payslips.
An increasing trend of HMRC asking others to deliver the bad news.
However, assistance from HMRC int he other direction is in very short supply.
But I didn't say that you were wrong. Of course you are allowed an opinion, as am I, without you saying I am wrong.
I really don't disagree with the general content of the article itself.
I just made the point that there is also the context to consider, it was a very scary time, like no other I can recall.
You said that was "wrong".
It wasn't wrong.
The scheme was rushed out, which has caused problems. However on the flip side, it did mean that a lot of 'genuine' businesses survived that otherwise may have been forced to close, with all of the consequences that brings.
A lot of those genuine loans will get repaid. Those business owners will hopefully flourish, employ lots of people and pay lots of taxes.
The banks have processes in place to lend money in normal times, to avoid high levels of bad debt / fraud / etc. However, in Covid times, those processes were too slow.
I recall when the Government got involved in bank lending policy in @ 2008 - 2010 with EFG loans. A lot of money was lent then with a 'government guarantee' which was not repaid.
It is easy to just bash the banks again.