HMRC is cautioning contractors in the UK to stay vigilant against tax scams. This warning follows an alarming increase in fraud attempts, with over 130,000 tax scams reported between September 2022 and September 2023.

As the Self-Assessment deadline on 31st January 2024 approaches, taxpayers are advised to be particularly wary.

Last week’s announcement revealed that nearly half (44.6 per cent) of these scams involved tax relief schemes. These fraudulent activities vary in approach, ranging from false reminders to update tax details to threats of arrest for tax evasion.

With an estimated 12 million people completing Self-Assessment, the likelihood of scam attempts is expected to rise in the coming months.

This increase in fraud is attributed to current economic conditions. The Association of Certified Fraud Examiners’ 2009 report highlights a direct correlation between economic downturns and a rise in fraud incidents.

Myrtle Lloyd, Director General for Customer Services at HMRC, has urged taxpayers to be cautious of fraudsters as the Self-Assessment deadline nears. She warns that criminals often use emails, phone calls, and texts that mimic government messages to appear legitimate.

HMRC advises the public to be sceptical of unexpected contacts, which could be scams. Taxpayers are encouraged to check HMRC’s scam advice on gov.uk for guidance on identifying fraudulent schemes.

Over the past year, HMRC has already acted against 60,000 phone scams and removed 25,000 malicious web pages.

However, concerns persist due to recent reports of HMRC’s outdated IT systems being prone to cyberattacks and data breaches, potentially exposing taxpayer information to scammers.

HMRC has reported several data breaches to the Information Commissioner’s Office in recent years, indicating a growing risk.

To combat this threat, HMRC encourages the reporting of any suspicious tax-related communications. Texts claiming to be from HMRC can be forwarded to 60599, emails to phishing@hmrc.gov.uk, and phone scams can be reported on GOV.UK.

It is crucial to learn how to identify and report these scams to protect yourself, your company and sensitive financial information.

***PLEASE IGNORE THIS REMINDER IF YOU HAVE ALREADY SENT US YOUR QUESTIONNAIRE***

If you would like Cogent to prepare and file your 2022/23 tax return and you have not yet sent us your completed Self-Assessment Tax Return Questionnaire, you will need to do so by 31 December 2023 to benefit from our discounted fee.

If you have a second shareholder, they may also need to file a tax return, even if they haven’t previously. For further advice, please contact our Tax Department.

The standard charge including VAT for a basic tax return is £240. Questionnaires received by 31 December 2023 will receive a 50 per cent discount on the basic tax return, charged at £120.

Any questionnaires received after 31 December 2023 will be charged at the full rate of £240.

Please note, that more complicated tax returns where additional work or supplements are required, will be subject to additional charges.

Our deadlines have been set so that we can complete your return in time to meet the HM Revenue & Customs’ (HMRC) online filing deadline of 31 January 2024.

Penalties for late filing of tax returns can be as much as £1,600, even when there is no tax due, so please ensure your tax return is filed on time, whether you ask us to prepare it for you, or you have made other arrangements.

You can request a questionnaire for 2022/23 by emailing tax@cogentaccountants.co.uk

Please return your completed questionnaire together with any attachments by email only to our Tax Department – tax@cogentaccountants.co.uk

You are required to file a tax return if:

• You have been asked to file one by HMRC
• You have a tax liability for the year (e.g. additional and higher rate tax, student loan in repayments, high-income child benefit charge or if you have any income which has not been taxed at source)
• You have a new source of income that needs to be declared.

***PLEASE IGNORE THIS REMINDER IF YOU HAVE ALREADY SENT US YOUR QUESTIONNAIRE**

Going into the Autumn Statement, Chancellor Jeremy Hunt knew he needed to make an impact as the fate of the nation, and his own party’s electoral prospects rested on his 110 measures for business.

In delivering his “Autumn Statement for growth”, the Chancellor made several pledges that he said were designed to help those struggling with the cost-of-living crisis.

Against a backdrop of falling inflation and a fiscal buffer of up to £25 billion, thanks to HM Revenue & Customs (HMRC) growing tax receipts from rising incomes and frozen tax rates, Jeremy Hunt launched into a speech to Parliament full of tax cuts.

For sole traders and self-employed individuals, the Chancellor announced the elimination of Class 2 National Insurance Contributions (NICs).

Presently, self-employed people earning above £12,570 are required to pay a fixed weekly rate for Class 2 NICs, which was slated to increase to £3.70 from 6 April 2024. Additionally, the Class 4 NIC main rate will be reduced from 9% to 8%, further benefiting self-employed individuals.

Regarding pensions, the Government will maintain the Triple Lock, ensuring that the basic State Pension, the new State Pension, and the Pension Credit standard minimum guarantee for 2024-25 align with the average earnings growth of 8.5%.

The Government also plans to tackle the issue of “small pot” pensions by considering a lifetime provider model, which would allow pension contributions to be transferred to an existing pension scheme when changing employers.

This model aims to offer individuals greater control and insight into their pensions. Jeremy Hunt has proposed consulting on giving pension savers a legal right to direct new employers to contribute to their existing pensions, potentially adding an extra £1,000 a year in retirement for an average earner starting savings from age 18.

Finally, as previously indicated, the Government intends to abolish the Lifetime Allowance in the Autumn Finance Bill 2023, with this change taking effect from 6 April 2024.

However, beyond his speech, there was a critical measure hidden within the Autumn Statement documents, which marks a substantial change to the ever-important IR35 rules.

The document revealed that the issue of “double taxation” under IR35 regulations will finally be addressed.

The document says: “The government will legislate in the Autumn Finance Bill 2023 to allow HMRC to reduce the PAYE liability of a deemed employer to account for taxes paid by a worker and their intermediary on payments received where an error has been made in applying the off-payroll working rules.”

This form of “double taxation” typically arises when there is an incorrect determination of IR35 status. In such cases, HMRC attempts to recoup the tax liability from the party paying the fee.

However, this calculation does not consider the taxes already paid by the contractor, leading to HMRC collecting additional revenue.

Rectifying this issue will simplify the complexities associated with off-payroll rules and decrease the financial risk for end-clients and fee-paying parties engaging contractors.

Thanks to everyone who participated and took the time to recommend our services to their friends and colleagues.

The lucky winner is…

Paul Jeffers from Marton-in-Cleveland
in Middlesbrough

Paul is an Engineer by profession but when he isn’t at work, he enjoys nothing more than watching rugby. In fact, he even travelled to France recently to enjoy the World Cup in person to watch England get all the way to the semi-finals, narrowly missing out on the final with a last gasp defeat to South Africa.

However, his passion for the game doesn’t end there, as he has spent the last 10 years coaching his son and his team and can even be found on the rugby pitch himself from time to time.

Paul is also a keen cyclist and has taken part in many charitable bike rides, from Coast-2-Coasts, to Lands’ End to John O’Groats tours. This year, he even fulfilled a long-time goal of cycling across Europe!

We hope he will enjoy taking his new iPad on his next exciting adventure.

Paul has been a client of ours for over 15 years and not only has he received an Apple iPad, he will also soon be receiving £100 for the introduction of his family friend and colleague, who will also get £100 simply for joining Cogent!

Once again, thank you to everyone who took part in our latest giveaway, your support means a lot to our team at Cogent.

You can also triumph by introducing your acquaintances, colleagues and connections to us… stay tuned for our next Cogent referral promotion!

In the meantime, each successful referral you facilitate will earn you £100 — and the individual you refer will receive £100 as well!

If you are aware of an individual or company that could potentially benefit from our expertise and guidance, please click the link below.

Refer a friend to Cogent Accountants.

If you have any questions about the services we offer or our referral scheme, please feel free to contact us.

In the traditional employment model, salaries are generally predetermined, with little room for individual negotiation.

However, the landscape is dramatically different for contractors and freelancers, who have the unique ability to set their own wage rates.

This freedom comes with its own set of challenges, but for those who navigate it well, the rewards can be substantial.

In the final part of this running series, we look at how you can improve the amount you are paid for your work.

Being Selective of New Contracts

Unlike permanent employees, contractors and freelancers have the flexibility to be selective about the projects they undertake.

They can assess the scope, budget, and timeline before committing. Being choosy about the contracts they accept allows them to work on projects that align well with their skill set and financial goals.

Leveraging Expertise

Specialisation can make a significant difference in earning potential. The more expertise a contractor has in a specific field, the more valuable their skills become.

Clients are often willing to pay a premium for specialised skills, providing contractors with the opportunity to set higher wage rates.

Scarcity in the Jobs Market

Many industries are experiencing skill shortages, particularly in areas such as technology, healthcare, and engineering. Contractors with in-demand skills can leverage this scarcity to negotiate better contract terms and higher wage rates.

Negotiating for Better Pay

When it comes to negotiating pay rates, contractors have several advantages:

• Market research – Before entering negotiations, research the going rates for your industry and skill level. Knowing your market value gives you a strong foundation for discussions.
• Value proposition – Position yourself as a solution to the client’s problem. Make it clear how your specific skills and experience can benefit them.
• Flexibility – Some clients might have budget constraints that limit the hourly or project rate they can offer. However, that doesn’t mean the negotiation is over. You can propose value-added services or suggest a longer-term engagement to compensate for a lower rate.
• Be ready to walk away –The ultimate power in any negotiation is being able to walk away. If a client isn’t willing to meet your rate or compromise on other aspects like the project scope, it might be in your best interest to politely decline and wait for a better opportunity.
• Review Regularly – Market rates and your skill level are not static. Regularly review and, if appropriate, renegotiate your rates. Clients who value your work are often willing to discuss rate adjustments.

Being a contractor or freelancer provides the unique opportunity to set your wage rates, but this freedom comes with the responsibility of knowing your worth and the skill to negotiate it.

By being selective in choosing contracts, leveraging your expertise, and understanding the dynamics of the current jobs market, you can command the rates you deserve.

In recent years, Artificial Intelligence (AI) has made significant strides, transforming numerous industries and professions—including the world of contracting and freelancing.

Far from the dystopian narrative of machines taking over human jobs, AI is helping freelancers and contractors achieve more than ever before.

From automating mundane tasks to offering advanced solutions for complex problems, AI platforms like ChatGPT are turning into invaluable resources.

Streamlining administrative duties

One of the major advantages of AI for contractors is the automation of tedious administrative tasks. Systems can now handle a multitude of tasks including appointment scheduling and freeing up valuable time.

This allows freelancers to focus on what they do best – applying their specialised skills to deliver high-quality work.

Enhancing communication

Communication is key in any professional setting, and this is especially true for contractors who might work with international clients.

AI tools can assist with real-time translation and even draft emails, ensuring that language barriers are no longer an issue.

Complex problem-solving

Advanced AI algorithms can tackle complex problems by analysing data, predicting outcomes, and offering solutions—all at a speed no human could match.

Contractors working in fields like data science, engineering, or finance can leverage these capabilities to offer their clients cutting-edge solutions.

Aiding in skill development

AI platforms often include learning algorithms that can aid in skill development. For contractors looking to diversify their skill set, this is a particularly beneficial feature.

From learning a new programming language to understanding the intricacies of digital marketing, AI can accelerate the learning process, making freelancers more versatile and therefore more valuable to clients.

Negotiating rates and contracts

AI can also help freelancers during negotiations by providing real-time market rates, drafting contract clauses, or even simulating negotiation scenarios.

With AI’s data-driven insights, contractors can enter negotiations better prepared, helping them secure better terms and higher rates.

The future of contracting with AI

As AI continues to advance, its applications within the freelance and contracting sectors are bound to grow. AI might become so integrated into these fields that it could be considered a co-worker rather than just a tool. It’s an exciting prospect that promises to bring about even more opportunities for contractors to achieve more, earn more, and work more efficiently.

AI is revolutionising the contracting and freelancing sectors in the best possible way, making these professions more efficient, versatile, and profitable.

Platforms like ChatGPT are at the forefront of this transformation, offering a myriad of ways for contractors to optimise their workflow and offer superior services.

Far from threatening human roles, the rise of AI is setting us up for a future of unprecedented productivity and professional growth.

***PLEASE IGNORE THIS REMINDER IF YOU HAVE ALREADY SENT US YOUR QUESTIONNAIRE***

If you would like Cogent to prepare and file your 2022/23 tax return and you have not yet sent us your completed Self-Assessment Tax Return Questionnaire, you will need to do so by 30 September 2023 to benefit fully from our discounted fee.

If you have a second shareholder, they may also need to file a tax return, even if they haven’t previously. For further advice, please contact our Tax Department.

The standard charge including VAT for a basic tax return is £240. Questionnaires received by 30 September 2023 will receive the full discount on a basic tax return, charged at £85.

If your questionnaire is received between 1 October and 31 December 2023, the fee will be discounted to £120; any returns received after 31 December 2023 will be charged at the full rate of £240.

Please note, that more complicated tax returns where additional work or supplements are required, will be subject to additional charges.

Our deadlines have been set so that we can complete your return in time to meet the HM Revenue & Customs’ (HMRC) online filing deadline of 31 January 2024.

Penalties for late filing of tax returns can be as much as £1,600, even when there is no tax due, so please ensure your tax return is filed on time, whether you ask us to prepare it for you, or you have made other arrangements.

You can request a questionnaire for 2022/23 by emailing tax@cogentaccountants.co.uk

Please return your completed questionnaire together with any attachments by email only to our Tax Department – tax@cogentaccountants.co.uk

You are required to file a tax return if:

• You have been asked to file one by HMRC
• You have a tax liability for the year (e.g. additional and higher rate tax, student loan in repayments, high-income child benefit charge or if you have any income which has not been taxed at source)
• You have a new source of income that needs to be declared.

***PLEASE IGNORE THIS REMINDER IF YOU HAVE ALREADY SENT US YOUR QUESTIONNAIRE**

Being a freelancer or contractor comes with its fair share of challenges and rewards.

Among the most empowering aspects of this work model is the autonomy to choose which contracts to accept.

This represents one of the core tenets of the freelancing lifestyle: freedom.

Yet, it can also be a source of uncertainty and stress for professionals just starting out or even for seasoned experts.

To help you feel empowered, we have explored the strategies you can take to help make informed decisions on which contracts to take.

Understand your worth

The initial step in navigating the contract selection process is understanding your professional worth.

This includes an accurate evaluation of your skills, experiences, and the quality of work you can deliver.

This understanding should translate directly into the rates you charge and the projects you opt for.

Some freelancers and contractors make the mistake of undervaluing their services to secure more contracts.

Although this may result in short-term gains, it often leads to long-term frustrations, burnout, and an unsustainable work model.

Knowing your worth and standing firm with it is crucial for long-term success and satisfaction.

Identify your ideal client

Not all clients are created equal, and not all of them will be a perfect match for your services.

Identifying your ideal client profile allows you to sift through potential contracts more efficiently and effectively.

This profile should include aspects like the client’s industry, size, values, communication style, and budget.

Knowing your ideal client allows you to focus your energy and efforts on securing contracts that align with your professional goals.

More importantly, working with clients that match your ideal profile often leads to more rewarding, less stressful projects.

Project scope and impact

Every project comes with its own unique set of parameters. Before accepting any contract, it’s vital to gauge the project’s scope and the potential impact on your workload.

A project that offers high monetary rewards but demands an unrealistic workload is not necessarily a good choice. Such projects can drain you, leaving little energy for other opportunities and damaging your work-life balance.

On the other hand, a project with a manageable scope and potential for high impact (either monetarily or in terms of portfolio-building) can be an excellent choice.

These projects can boost your reputation, provide learning experiences, and propel your freelancing or contracting career forward.

Contract terms

Before signing any contract, make sure you fully understand the terms and conditions. This includes payment details, deadlines, work expectations, and intellectual property rights.

If there’s something you’re not comfortable with or that could potentially harm your business, negotiate the terms, or consider rejecting the contract altogether.

Transparency and mutual respect should be the foundation of any contract. If a potential client is unwilling to negotiate or discuss contract terms openly, it could be a red flag indicating future issues.

Cultivate strong networks

Finally, maintaining strong professional networks can dramatically improve your contract selection process.

Networking with other freelancers and contractors can offer insights into potential clients, projects, and industries.

These connections can also provide valuable advice on how to handle challenging situations and difficult contract decisions.

In addition, strong networks can lead to referrals. Referred clients usually match your ideal client profile closely and can offer contracts that align well with your professional goals and values.

Don’t buckle under the pressure

Most contractors feel that they need to take each contract that comes their way, as there is never any guarantee of where the next project will come from.

However, this doesn’t mean that you should settle for less and leave yourself exposed to work that is unfulfilling or not financially rewarding enough.

The freedom to choose which contracts to accept is a powerful aspect of the freelancing and contracting lifestyle.

By understanding your worth, identifying your ideal client, evaluating contract terms, and cultivating strong networks, you can navigate the contract landscape confidently and successfully.

The Perks of Being a Contractor: Optimising Your Time Off

As a contractor or freelancer, your relationship with work is fundamentally different from that of a traditional employee. As your own boss, you call the shots.

When it comes to holidays or time off, some significant benefits often go unnoticed. We will look in detail at these advantages and provide tips on how to make the most of your flexible schedule.

Total flexibility in scheduling

The fundamental advantage of being a contractor or freelancer is the freedom to set your own work schedule.

Unlike traditional employees, you’re not restricted by the fixed holiday calendar of an organisation.

If you prefer the serenity of off-peak travel, want to avoid the summer crowds, or have a desire to take an extended holiday during non-traditional periods, as a contractor, you can. This flexibility allows you to enjoy your time off to its fullest and often at a lower cost.

No need to “accrue” leave

As a contractor, you’re free from the constraints of “accrued” leave. Regular employees must earn their time off, usually calculated by the number of hours or days they’ve worked in a year.

As a freelancer, you can simply decide when to take your holiday, for how long, and how often. As long as you can afford to take the leave and your contract with the organisation you are working for allows it, your schedule belongs to you.

Control over income and expenses

While you do give up the security of paid holiday leave, you gain more control over your income. As a contractor, you can plan ahead and work additional hours or take on extra projects to fund your time off.

If you intend to take a holiday it is important to consider the impact this will have on your finances and you may even build a safety net into your fees to allow you to take the time off you desire.

Work-Life Balance

Taking time off as a freelancer or contractor can be a balancing act. However, with the power to manage your own time, you can create a work-life balance that suits your needs.

You might choose to take a longer holiday but still maintain a limited amount of work during this period.

Technology allows us to stay connected, so if your job permits, you can work from anywhere in the world. The key is setting boundaries that allow you to enjoy your holiday while still keeping your business running.

Maximising the Benefits

To make the most of these benefits, planning is crucial. Plan your year ahead, noting when you’ll likely be busiest and when you can afford to take time off.

Consider creating a ‘holiday fund’ as part of your financial planning. As you won’t be earning while on holiday, setting aside a portion of your income throughout the year can ease the financial burden when you decide to take a break.

Always communicate your availability with clients well in advance. This helps manage their expectations and keeps your professional relationships strong.

Being a contractor or freelancer offers a unique way to balance work and life, and the freedom to take time off as you see fit is a major part of that.

Make the most of this flexibility, and you’ll find your work more satisfying and your holidays more rewarding.