Friday 18 October 2013

Will UK recruiters really be in the firing line?

HMRC’s intention to crack down on unscrupulous “offshore” (non-UK) umbrella schemes has been well-publicised.  However, ItsInternational, TEAM’s international tax advisor specialising in the recruitment and international contracting market, conducted telephone research with SME recruiters which exposed a poor understanding of what has led to the new legislation and how it could impact a recruiter’s UK business. For those of you not up to speed with the latest developments, please read on.

What is HMRC up to?

IHMRC has no jurisdiction over offshore companies whereas they do over onshore UK recruiters and their UK clients.  From April 2014, if any of your UK-based placements operate UK assignments as employees of an offshore umbrella and that ‘employer’ fails to account for due UK tax and NIC, HMRC will make you, the recruiter, accountable as “the UK intermediary contracting with the UK end client”.  However, if you fail to satisfy HMRC’s demand for due tax and NIC, HMRC then turns to your client who is at the end of the contract chain “unable to escape liability by arguing the placements were not subject to his control”. 

There is a key exception to these rules.  The transfer of historic debt and future liabilities will not occur if the offshore employer is based in one of the 30 countries making up the European Economic Area because HMRC is already able to pursue such debts through reciprocal arrangements.

Why is this a big deal for recruiters?

ItsInternational takes the view that if you ever have to face HMRC on issues related to the new legislation, you may well suffer potentially heavy costs. If your client is then exposed to HMRC investigations, you are likely to face a severely dented reputation. 

Most pundits agree the one driving force which helped trigger this new legislation is HMRC’s dislike of umbrellas which pay their employees very low salaries and make substantial funds available to those same employees as ‘tax-free’ and, in practice, non-repayable loans – thereby yielding your placements amazing and seemingly unrealistic retentions.  HMRC deems such loans to be undeclared income. 

How does HMRC deal with interest-free loans granted by an umbrella to your placement?

When an umbrella (whether ‘offshore’, ‘onshore’, inside or outside the EEA) gives its employee (your placement) working in the UK an interest-free loan (or, more likely, several interest-free loans) totalling more than £5,000, there are currently UK tax implications.  Being an interest-free loan, your placement is actually receiving a benefit from the umbrella (his ‘employer’) as he does not have to pay any interest on the sum(s) borrowed.  The umbrella has to enter details of the benefit-in-kind (i.e. the interest saved) on a P11D.  However, HMRC does expect your placement to pay tax on the amount of interest he has saved (it reviews the rate every year which has stayed at 4% since April 2010).

Once your placement stops working for his umbrella, there is no further need to enter the loan details on a P11D.  Although the loan remains on the umbrella’s books as an outstanding debt, it is no longer deemed by HMRC to be a benefit-in-kind.

How does HMRC deal with interest-bearing loans granted by an umbrella to your placement?

If your placement agrees to take loans on the basis he is paying HMRC’s notional interest rate of 4%, the umbrella is not required to complete a P11D. 

However, if your placement is not repaying the loan interest, the loan(s) remains visible to the authorities and his increasing tax liability on an ever-increasing amount of interest becomes onerous.  Furthermore, when the beneficiary of the loan dies, his estate is expected to repay the loan.  It is highly unlikely the loan would have been written off by the umbrella which granted it.  Therefore, that loan plus all the accumulated interest has to be repaid.

Do loans granted by these umbrellas get repaid?

Normally, the loan documentation issued by the umbrella states either the loan is repayable on demand at some time in the future or there is a detailed repayment schedule.  Both are currently legal under UK law.   

In practice, offshore umbrellas rarely demand a repayment of the loan(s) or the repayment schedule is simply ignored.  At this point, HMRC considers (stated as “opinion”, not “law”) the loan(s) to be “unreal” and open to interpretation as “disguised remuneration” which is subject to tax, NIC, interest and penalties.  However it should be noted HMRC has not declared these loan schemes illegal under UK law.      

Hot off the Press

Letters have recently been sent by HMRC to a group of contractors who, at some stage(s) since 2008, worked for umbrellas which paid relatively low salaries and granted relatively high loans which have not been repaid.  It appears HMRC considers the loans to be undeclared income and the letters spell out the outstanding tax liability. 

Each letter invites the recipient to either settle HMRC’s assessment (comprising the outstanding tax on the loan amount and the due interest plus discounted penalties for early settlement) or to attend a Tax Tribunal and appeal HMRC’s decision. 

On one level, HMRC probably wants every recipient (and there are probably thousands on HMRC’s hit list) to settle immediately to facilitate a smooth pathway for a vast revenue haul.  HMRC may believe it is a much cheaper option for contractors rather than they risk losing an appeal to the Tax Tribunal and bearing the associated legal costs, higher penalties, high stress and time pressures.

On another level, HMRC may want recipients to appeal so it can win test cases to smooth implementation of the new law.  However, HMRC is risking one or more of the contractors successfully appealing against the assessments on the basis that the loans were granted within the law.

What happens next?

HMRC is likely to throw substantial resources into winning test cases so it can outlaw specific schemes and, more importantly, redefine loans or redefine ‘disguised remuneration’.

More worryingly for recruiters:

·       Will HMRC make the new legislation similar to Dutch ‘chain law’? 

·       Will HMRC make the new legislation retrospective (as it appears to be doing in the letters sent to contractors)?

It is clear recruiters now have to review current PSLs and due diligence procedures to ensure they are truly offering their UK placements a selection of suitable service providers.  If you issue a PSL, your placements will naturally presume you continually evaluate those service providers to justify them being included on the PSL. 

From its telephone research, Itsinternational was disappointed to uncover recruiters placing in the UK and overseas who knowingly or otherwise pay lip service to their selection of compliance service providers – an interesting topic for a future newsletter! 

Remember, as a TEAM Member, either placing or aspiring to place consultants or interims abroad on fixed-term assignments, you can benefit from the TEAM INTERNATIONAL HELPLINE – a free service provided by ItsInternational exclusively for you.  For a complimentary consultation, call 020 7477 2660 or email us at TEAM@itsinternational.ltd.uk. 


Tuesday 25 June 2013

Our ethos has always been a simple one

As Business Manager at Personnel Placements I support Keith and Julie Hanson, the business owners with the day to day running of the Agency as well as being a hands on recruiter. I’ve been part of the team at “PP” - as the Agency is affectionately known within the local business community - for the past 12 years so have seen many changes along the way! Starting as a permanent consultant, I have also managed the commercial temporary desk and moved into my present role 3 years ago. I’m currently training with 6 colleagues to climb the 3 Peaks in August to raise funds for the local hospital and so am climbing hills, walking coastal paths and running up the many flights of stairs we have in the office in a bid to finish the challenge in 24 hours!

Personnel Placements is a generalist Agency that was established by Keith and Julie in 1986, so we are in our 26th year! Initially supplying secretarial and administration staff we now cover all sectors and are the area’s largest independent Recruitment Agency, supplying temporary, interim and permanent staff.
Salisbury is a great place to work, full of beautiful historic buildings including our Cathedral – with the tallest spire in England and a real mix of large, blue chip companies as well as smaller, niche businesses that we recruit for.

Our success is down to having a team that is passionate about what they are doing and who work hard at building lasting relationships with our clients. We really get to know our clients, many of who started out as candidates! Salisbury is a small place and our reputation has been built on honesty and ability to adapt and be flexible when needed as well as supporting the local community as a whole. Not every business is the same and our ability to tailor our service for each, individual client has given us the edge.
Recent involvement in local Business Events, Networking Groups and social networking has helping to increase our brand awareness and also established connections with other businesses that may not need our services currently but who recommend us to others, send candidates our way and generally take an interest in what we have to say.

As the industry has changed we have also had to look at new ways to add value and be more competitive without compromising on the quality of our customer service. We provide an HR & Training Advice service to complement the recruitment side of the business and use TEAM as a way of being able to recruit at senior levels and for more specialist or technical positions. Keith also runs local HR Forums which give support to stand alone HR Professionals and we are using our new website blog to provide free, helpful advice to job seekers and businesses alike. 
Personnel Placements is one of TEAMs founder members and Keith currently chairs the TEAM Executive and Specialist Recruitment Divisions, one of the fastest growing divisions within the TEAM network. We were absolutely thrilled to be voted TEAM member of the year by our fellow members earlier this year. 

We appreciate the value of TEAM and have worked with several members to not only supply staff outside of the area but also supply clients locally. We work frequently with agencies nearby, such as Karen and the Team at Personnel Selection Andover, Bev at White Horse Employment Trowbridge and Liz at Dovetail in Bournemouth and we’ve also utilised specialist recruiters such as Focus Select – Ross and Asad have helped us on more than one occasion to find IT Professionals for local Salisbury businesses. We have also been able to use supply both temp and permanent staff to clients in London via the TEAM network. Benefits are not only financial, attending Regional TEAM meetings, sharing ideas and just using each other as “a sounding board” has been really useful.

Our ethos has always been a simple one – we work with honesty and integrity, and we have found that all TEAM members we work with do so with the same level of trust and cooperation.

It works because we talk to people and get to know the TEAM consultants we work with as well as we would our client. So I hope to be talking to even more of you very soon!

Monday 7 January 2013

Setting Your Social Media Goals for 2013


After spending a lots of time with recruiters during 2012, I’ve found that some businesses fail to realize their full online potential because their goals are simplistic, misguided, or completely unrealistic.   For example, when I initially work through my clients social media goals, I guarantee that at least 70% of them will say that their main goal would be to increase sales.

Don’t get me wrong, increasing sales is fundamental to business success and sales growth is one of the many benefits to having a successful social media strategy.  But in order to achieve that goal, I advise breaking the ultimate goal down to identify specific targets that will lead to the end result. 

One exercise that I run in my workshops is to get business owners to consider other objectives that they may not have considered before.  Here are a few examples of better foals to have when crafting your social media strategy:

1.      Increase traffic to your website
2.      Establish credibility as the expert in your field
3.      Build your audience / following.
4.      Build your email list by using opt-ins
5.      Brand awareness (great for new businesses)
6.      Increase customer loyalty
7.      Discover new opportunities
8.      Reputation Management
9.      Raise awareness of a new product or service

Setting these types of goals will ultimately lead to increased sales.  If you think of social media as a tool that builds your reputation, generates awareness and brings more visibility to your business then you have the right mindset from the very beginning.  

It is worth keeping in mind that these are not the only goals that you can set.  Maybe you want to have a goal that’s more specific to your recruitment business, like educating job seekers about an aspect of your business that is often misunderstood.  Whatever the case, I highly recommend identifying two short term goals. Finally, while not everything in social media is measureable, it certainly does help if you can select goals that are measureable.    Use tools such as Hootsuite, Google analytics, KLOUT, Crowdbooster to measure your success. 
Have you set your social media goals for 2013?  What are you working towards?

Julia Doherty
Green Umbrella  

Land:
 01604 726758
Mob: 07855 522 027

Wednesday 5 December 2012

GUEST BLOG: ‘Are you starting to supply or do you supply temporary workers?’



For many years, it was an accepted industry practice that recruiters would supply labour to hirers using their own terms and conditions. These terms were generally based on the TEAM “model” standard terms and conditions and in it, from an insurance perspective, the recruiter tells the hirer that he doesn't accept responsibility for negligent acts, errors and omissions of the worker supplied.

Providing the recruiter has sourced and supplied the right person for the job, then it is up to the hirer to make sure that the agency worker is doing his job to the hirers satisfaction.

Where the hirer insists his terms and conditions are used rather than the recruiter then the
hirer may be looking to be “indemnified” or “covered” in simple English, should the agency worker cause injury or property damage, or make a mistake that costs the hirer money. In these circumstances, the hirer will make a claim against the recruiter and the policy, if set up correctly will protect the recruiter against legal costs or damage claims made against them, where they become legally liable. Therefore it is important that they let insurers know at the start of the policy or at renewal what percentage of turnover is done on standard TEAM terms or hirers non-standard terms. The premium will be calculated based on the percentage mix.

Some policies still insist that cover only applies where standard TEAM terms have been agreed. Be careful to notify insurers, if this changes.

Our Recruiters Choice policy doesn't need you to refer every contract but you must discuss the fact that you do sign or agree non-standard contracts either at the start of the policy or at renewal, or at the first opportunity when you agree to work under clients terms.

Phrases to be aware of that may need you to refer contracts to insurers:-
  • Where the hirer wants to be noted as an additional insured or co-insured on the policy
  • Where the hirer wants Consequential Loss to be covered
  • Where the phrase – unlimited indemnity appears in the contract
  • Where the phrase wilful and malicious acts appears in the contact
  • Where the legal jurisdiction is other than UK or EU (ie where a claim may be brought against the recruiter)
  • Where the business services you are supplying are anything else but labour supply
  • Where the contract requires a higher limit of indemnity
  • Where the client wants you to cover the error and omission of the worker – this may require Vicarious cover on Professional Indemnity if supplying workers who are providing professional services

If you are starting to supply temporary workers as opposed to permanent workers, there could be many other issues that need reviewing apart from Liability and Professional Indemnity such as Legal Expenses, Employment Disputes and AWR.

It is important to discuss these issues with the broker to ensure the right cover is in place.
Don't rely on the umbrella company or single person Ltd company insurance policy - your name is on the contract.

The golden rule is that if you are unsure, then contact the broker and get a confirmation in writing to state that cover is in place for that contract.

Jelf Manson carries out contract vetting (from an insurance perspective) for all its clients which can assist in a contract tender situation – do not wait until the day before a contract commences as there may be a premium to pay for the higher contract risk, which will eat into your margin.

For more information please contact Cathi Boult at Jelf Manson

0161 245 1274
07818 035 305

Jelf Insurance Brokers Ltd* (Reg No. 0837227) is part of Jelf Group plc (Reg No. 2975376) and are registered in England and Wales at Hillside Court, Bowling Hill, Chipping Sodbury, BS37 6JX. *Authorised and regulated by the Financial Services Authority (FSA). Not all products and services offered are regulated by the FSA.

Thursday 29 November 2012

GUEST BLOG - "The day of the Online Brochure is well and truly over" Julia Doherty at Green Umbrella



"The day of the Online Brochure is well and truly over. No longer is it acceptable to have a basic website that just explains what you do and where you are…. that’s very boring and Google agree! Blogs are the new websites. In the words of Paul Chaney they are living, breathing sites, upscale chatrooms and constantly growing newsletters. In essence blogs create vital energy and can help your business to develop and grow.
So, I thought I would put together a list of key tips and tricks to enhance your own blog, so that Google will love it!
1. A business blog should be within your website.
If you are serious about your business, then you need to incorporate your blog within your website rather than on a separate platform. Don’t get me wrong, if you want to have a personal blog to reflect your thoughts and opinions, then feel free to go with blogger or wordpress.com site.
Let me explain the difference between these two sites. The main difference is the domain names. ie: if you want a freebie site then go with a wordpress.com site. Your blog address will then look something like this www.joeblogs.wordpress.com, however if you spend a little bit extra then you can download the software for WordPress.org and create a completely unique URL. (like the Green Umbrella site – which is a wordpress.org site).
3. Be consistent in your postings
Tempting as it may be, but please try and be constant in your content. Ie: just because you are interested in Wimbledon, do not write a blog about it on your business site. Think about your target market and why have they subscribed to your site?
4. Mix the style of content
What do I mean by style? People learn in different ways. Therefore on a regular basis I often embed a visual “how to video” into the Green Umbrella Blog, and weekly I will also embed an audioboo (audio podcast) with written show notes. Having a guest blogger on your site will also add variety and a different dimension to your site.
5. No sales pitch allowed.
Ok, this is not completely true as I always recommend a call to action at the end of every blog – but please do not post regular sales pitches into your blog. This is what email marketing is for… not a blog!
6. Remember keywords and backlinks.
A backlink (otherwise known as link-bait or hyperlinks) are an excellent way to help with that all important Google juice. To turn a word into a hyperlink, simply highlight the word then click the cntrl K buttons – then post the URL. It’s highly effective.
7. Maximum of 500 words (in my opinion)
A good blog article should be from 300 - 500 words (give or take). It is quite acceptable to write very short articles (such as two paragraphs). I subscribe to Seth Godins blog (author of The Purple Cow and many others!) and his are often very short.
8. Quality is better than Quantity.
If you are looking for a quality blog then subscribe to Sunil Bali’s blog (click here). I enjoy the humour in his blogs and I look forward to receiving it every Sunday morning (the blog that it is!!!!).
9. Lists, lists and more lists.
List articles like this one, are very popular and easy to read as you can skim through the headers. List and tips are a great way to blog!
10. Import your blog into LinkedIn and Facebook.
If you are going to the trouble of writing a blog article on a regular basis, then you are wasting a valuable opportunity if you have not linked your profile to Facebook, Twitter and LinkedIn! LinkedIn has some great apps – so use them!
11. The title of your blog is important
The title of your blog is the most important part of the article. Make sure that you are using excellent keywords and that you are maximising any Google opportunities.
12. Tip for Article Directories.
If you are uploading your article to any directories (and of course the 4N website as its FREE for members) – what?? you are not putting your articles anywhere else???? Oh no! Well, if you have taken the time to write a fabulous article, then make sure that you also upload to these places to maximise your opportunities for exposure. ezine, go articles,articlebase, 4networking.
Big tip is to make sure that your article is indexed on your own site by Google before you upload anywhere else.
13. Regurgitating other peoples content is a big NO NO
Please do not take credit for others efforts. If you feel the need to share another persons work on your own website then please backlink the original article and give credit to the person who wrote it. The best articles are the unique and original ones that offer some authenticity.
14. Always add a visual
As people like to see something visual, then always try and add a photo (original) or a picture of some kind to draw in the crowd.
For more specialist social media help and assistance you can contact Julia via an array of different marketing channels - namely twitter, facebook, LinkedIn, You Tube, Google Plus, Wordpress etc. Or if you are feeling a little nostalgic, then there is nothing wrong with just calling her on 01604 726758 or 07855 522027 or emailing  julia.doherty@green-umbrella.biz.

Tuesday 13 November 2012

Have you heard about our new benefits?


At TEAM, we recognise that employers often spend significant amounts on their staff, but rarely is the true value fully appreciated. In light of this, we have designed a new benefits scheme for both you and your employees, with the aim of enhancing morale and loyalty within your organisation.
In collaboration with TEAM Service Provider EAS, we've spent the last few months producing an exclusive benefits plan for TEAM Member employees and agency workers. The final products are branded under The Employee Benefits Bureau, and our Members will have access to special discounted rates. This is something that we've wanted to do for a long time, and we’re thrilled that we’re now able to offer you even more privileges as part of TEAM.

So what does our Benefits Club mean for you? Well, it provides access to special and exclusive benefits for you, your employees and your agency workers, all for only £40 per month (plus VAT). It offers financial non-salary advantages, gives you access to the best financial advice, and allows you to secure valuable savings on a wide range of products and services.  
Here are just some of the things on offer:
  • A free annual benefits audit review to ensure that you continue to get the best possible value for money from your budget
  • Access to special facilities and terms so you can gain from goods and services on a cost effective basis
  • Access to a full range of compliance services including Jargon Free Benefits (JFB) so that you can be fully compliant with all the new regulations and be up and running in time for your staging date
  • A full flexible benefits package via Jargon Free Benefits (JFB) at a fraction of the traditional costs
  • Access to the full marketplace of leading product providers via our sister company Executive Advisory Services (EAS), including all of the traditional household names such as Aviva, Axa, Prudential, Scottish Life, as well as some specialist players
  • Completely independent advice as EAS is an Independent Financial Advisor
  • Discounted implementation rates on a wide range of products and services, such as; 
    • Death in service benefits, which is designed to pay out a multiple of salary to the surviving spouse/partner/dependents in the event of death
    • Income protection cover/permanent health insurance, which provides an income in the event of long term illness or disability so that you can keep paying your employee until they return to work or reach retirement age
    • Critical illness cover which pays out on diagnosis of a wide range of critical illnesses, such as heart attacks, strokes, and cancer
    • Pensions
    • Keyman insurance and shareholder protection, which provides a lump sum to cushion your business from the full impact of losing someone valuable. Shareholder protection also helps to facilitate the purchase of shares from a deceased shareholder or partners estate/surviving spouse/dependents
    • Private medical insurance.

In addition, significant savings can be made on a whole range of online and high street goods including your weekly shop. You can also have personal accident cover, healthcare cash-backs with family options available, individual private medical insurance with AXA, and discounts on financial products and services.
You can find out more information online, where you can also find an application formYou've already joined TEAM, so why not join the Benefits Club and really take advantage of everything that we have to offer. 


TEAM - The Employment Agents Movement UK Limited
Registered in England No. 03949265 Registered Office 3 Hillbrow House, Linden Drive, Liss, Hampshire GU33 7RJ