This month…

Coronavirus, COVID-19, social distancing, furlough, vulnerable, transmission, contact tracing, pandemic, flatten the curve, herd immunity, PPE, PHE, lockdown, self-quarantine, a-symptomatic, Wuhan.

I’m not being alarmist by quoting these terms. I was just thinking about all the words that have now come into our regular vocabulary over the last two months or so. It’s incredible how life and language have changed so much.

But equally, we have other words and phrases that show some positive changes. Stay at home, working from home (unfortunately not for all), getting to know your family better, noticing and enjoying nature and the outdoors (why do so many people have tans?), exercising once a day, now as many times a day as we want (BC-before corona, who ever exercised every day!)

A few weeks ago we started a new custom in our house. Each of us, that’s 5 in our house, cook supper one night a week (the other two nights everyone can do their own thing). Great for my wife who used to cook every night! It’s a challenge and I just have to decide when it’s my turn whether to watch a Gordon Ramsey or Jamie Oliver YouTube to guide me on how to cook my supper. One night a week is fun, but every night is a big chore. Might be my next business idea!

Our own story at Cogent is that we moved from the office to our homes just before lockdown and everyone is working well from home and we’re all pitching in and helping each other to continue providing the best services we can to our clients, which is always our main aim. As you know, we have been making the Coronavirus Job Retention Scheme (CJRS) claim for those of our clients who are unfortunately not working due to Coronavirus and furloughed and have now made many successful claims. We do this without charge and with great enthusiasm to help our clients through difficult times.

As Abe Lincoln said in a well quoted line from a speech: “This too will pass”. As difficult as times are, this situation too will pass. It may change working conditions and possibly in some way for the better. We look forward to working and having a partnership with you for many years to come in health and safety.

Best regards,

Victor Korman
Managing Director
Cogent Accountants

A new study has revealed that most contractors who have been assessed as within the scope of IR35 by a private sector client intend to revert back to being outside IR35 following the Government’s 12-month delay to the launch of the off-payroll rules.

A survey of 1,000 limited company contractors found that 56 per cent of contractors who had been placed inside IR35 and are working via an umbrella or PAYE, intend to revert back to working outside of IR35, while a further 27 per cent are undecided on what approach to take.

The same number of contractors (56 per cent) said they had already been assessed by their client, of which 52 per cent had been deemed to be inside IR35.

Worryingly, 40 per cent of those surveyed believed they had been placed inside IR35 as part of a blanket approach by their client. However, a third said that the client had reversed this decision after they appealed.

This shows that many businesses are now taking a pragmatic and fair approach to avoid banning genuine contractors, which will hopefully be replicated when the rules come into force next year.

The Treasury has announced that as a result of the COVID-19 pandemic it intends to delay the changes to IR35 until April 2021 to assist contractors and businesses in their preparations for this landmark change.

This gives contractors the right to decide their own IR35 status for a further year.  After this date, it will become the responsibility of the client to determine status and pay contractors accordingly.

Despite this delay to the off-payroll rules, it is important that contractors begin to make preparations for next year and communicate with clients about their intentions for determining their IR35 status.

Many of us may be disappointed by the fact that we may not be able to travel this summer to our favourite overseas destination due to the restrictions placed on travel and the need to self-isolate after returning from overseas under the Government’s latest guidance, but it could lead to a boom in British tourism.

Many news sources are reporting a surge in bookings for staycations later in the year, as holidaymakers hope that restrictions will be lifted further so that they can enjoy all that Britain has to offer.

This boom to British tourism is likely to have a trickledown effect on the rest of the economy, including in sectors where many contractors work.

The extent of this surge in staycations will rely on the Government’s approach to easing restrictions in the coming weeks and months.

Under it’s three-point plan, released this month, it suggests that if the rate of infection sinks low enough, phase two (the opening of non-essential retail and loosening of other restrictions) could take place from 1st June. The next step, which would allow for the opening of leisure and hospitality venues, on which many holidays will rely, could take place as early as 4th July.

However, each of these phases will have to rely on scientific evidence and if the Government suspects that we are heading towards a second peak of infections then it may be forced to re-impose tougher restrictions.

Let’s hope that we can all enjoy a brilliant British summer, weather permitting of course

Keiahna Jackson has had £450 returned to her by her local bin men after it was accidentally thrown away.

The 18-year-old had recently celebrated her birthday and been given the cash by friends and family to help pay for a holiday, but she was left distraught when the money was accidentally chucked out with wrapping paper and been collected by Stockton Council’s refuse team.

Having realised the mistake, the family called up the council and asked for help to recover the money.

eiahna’s Mum, Leanne Best, told Metro newspaper: “I asked if there was anything they could do and [the council worker] said she would try but couldn’t promise anything.

“At that point, we just thought we had lost it and I poured myself a big stiff drink and sat outside, saying to myself, ‘it’s just money’, but in the current climate, I was really mindful that money is tight for people. I was thinking: how do I tell all those people that sent her gifts in the post?”

After hearing about Keiahna’s plight, the bin men sprang into action and began searching for a distinctive yellow bag that the family believed the money was in.

Incredibly, the money was located and found to be intact and on the same evening the team drove back to Keiahna’s home to deliver the cash back to her. They were met by a rapturous applause from neighbours, who thanked them for their hard work.

Leanne said: “They’d actually looked through the waste and unbelievably found the bag and the envelope with all the birthday money in it.

“We still can’t believe they took the time to look for what must have been a needle in a haystack and actually found it and returned it – it absolutely made the day even more special.”

The Chancellor, Rishi Sunak, has confirmed that the Coronavirus Job Retention Scheme (CJRS), which was due to end on 30 June, will be extended until the end of October, with no changes until the end of July when employers currently using the scheme will be able to bring back furloughed employees part-time.

From August, the Government has said that furloughed workers will continue to receive 80 per cent of their usual salaries capped at £2,500. However, employers will have to make a currently unspecified contribution to this cost.

Details of these arrangements are due to be published by the end of May and we intend to bring you a full breakdown of these measures once guidance has been issued.

The CJRS currently allows employers to retain employees on the PAYE payroll who are not carrying out work for them by placing them on furlough and to claim a grant of 80 per cent of a furloughed employee’s usual pay, plus employer National Insurance Contributions (NICS) and minimum employer auto-enrolment pension contributions.

The Chancellor said that since the scheme was launched in March, more than one million businesses have furloughed more than 7.5 million workers.

Our refer a friend scheme is really popular and can help you earn a little extra from us on top of the great services you already receive.

We have many happy customers who love the service we offer (take a look at our Trustpilot reviews here) and we are sure that many more of our clients would love to spread the message about our high levels of support – especially during these challenging times.

It may all sound too good to be true, so to help we have answered some of the common queries about our refer a friend offer.

How much will I get paid for referring a friend or contact to you? 

You will receive £100 for each person that you refer to our services.

Not only that, but the person referred also gets £100.

Can I refer more than one person to Cogent? 

Yes, the more you refer, the more you can earn. If you refer five or more friends then you will receive £1,000.

This includes £100 for each of the initial four referrals and a further £600 for referring a fifth client to Cogent within a six-month period.

How soon will I be paid a referral fee?

In order for a referral fee to be paid, the recommended client must have become a client of Cogent and paid fees for a minimum of two months.

Can anyone refer a friend and earn 100’s? 

In order to qualify for the scheme, the referrer must be an existing or former client of Cogent.

The scheme will not apply in respect of any recommended person who was a client of Cogent at any time during the 24 months period prior to the referral.

What will those I refer benefit from? 

If you are already using our services then you will know how great they are. Anyone you refer can choose from our three fantastic, cost-effective service packages, which start at just £95 + VAT per month.

Whichever package they choose, we always deliver proactive advice and guidance of the highest standard.

They will also get free access to FreeAgent’s online accounting systems, which is one of the leading pieces of software on the market for small businesses, sole traders and contractors

Further details about our FreeAgent service can be found here.

Is it easy to refer a friend? 

It couldn’t be simpler. To start your application, please click here.

You will be asked to supply your information and the details of the person you intend to refer, as well as agreeing to the terms and conditions of this incredible offer.

Here to help 

If you have any questions about our refer a friend scheme or would just like to know more about the services we offer, please contact us.

To ensure our team remains safe and to provide continuity of service throughout this challenging period, all Cogent staff will continue to work remotely for the time being as per Government instructions.

Thanks to our use of the latest technology, our team can operate remotely, which means that the support and services that you receive will continue to be delivered as smoothly as possible throughout this time.

Our office main number will continue to operate as normal.

Please be assured we will continue to work with you through this challenging time.

Please stay safe and well.

The Team at Cogent

Clients will be aware, from the information we have sent out and public information that the Government has made available, that a number of financial measures to help business and individuals who have lost income due to Coronavirus have been launched.

One of these is the Coronavirus Job Retention Scheme (CJRS), which aims to stop employers having to make employees redundant due to financial pressures brought about by Coronavirus.

This is done by putting the employees into ‘furlough’, which means the employer keeps them on the books and the Government will provide a grant to the employer to pay 80 per cent of the employee’s normal salary up to a maximum of £2,500 per month. The scheme will not cover any dividend income clients would normally receive.

The CJRS can also be used by directors and employees of Personal Service Companies. If you have a continuing contract and your company has income then thankfully you will not need to use the scheme.

If, however, your contract has stopped and you do not have work and believe you cannot get work due to Coronavirus issues then please let us know when you stopped work and we can make an application for the grant for you and your company. We are doing this at no cost to help our clients at this very difficult time.

So please remember it is important to let us know if you have stopped work and are unable to start a new contract due to Coronavirus – simply send an email to tax@cogentaccountants.co.uk and we’ll be in touch.

Please ignore the above if you are working or have previously advised us you have stopped working due to Coronavirus.

This month…

Over the last few months, I have been speaking on this newswire slot about the status of the new Off-Payroll Tax that was due to come in on 6th April and at the last minute was deferred until April 2021. This was very much to do with the Lords Committee enquiries into the tax and their examination of witnesses from the Treasury and HMRC which left the Lords wholly underwhelmed.

This week, we saw a Lords letter to Jesse Norman at the Treasury continuing to ask them difficult questions about their intention that Off-Payroll should start in April 2021, when the Lords are saying that much real analysis of the laws needs to be done. Dare we hope that the Lords will manage to get the whole Off-Payroll Tax looked at again and in a fair way.

However, Off-Payroll and IR35 seem a distant issue. Amazing that it’s just over a month that this was so prominent in all our minds. How fast things can change! Now, we are hoping on a worldwide basis that governments will get in control of the COVID-19 pandemic for the sake of people’s health which is of course most important. The economic wellbeing of the country and the freelance world is secondary to health issues but it is also essential, so we hope that our Government can balance the health and economic issues and steer us to wise decisions. I wouldn’t want that job so will not be standing for election as Prime Minister in the near future.

At Cogent in recent weeks, it has been our aim to help our clients as best we can in these very difficult times. To that end, we have set up a process to make the Coronavirus Job Retention Scheme (CJRS) grant applications on behalf of our clients at no cost. We have found this to be an extremely time consuming project but, in our opinion, when clients have stopped working with COVID-19 related issues, we want to be loyal to our clients and help them in whatever way we can so there will no charge for us making this grant claim on behalf of clients. I hope that we can help each other build our business relationships and look forward to the end of this pandemic soon and a return to full economic prosperity.

The Coronavirus Job Retention Scheme is only available to companies where they have lost their income, so if you are continuing to work this is not relevant to you.

Please contact us if we can help in any way – simply send an email to tax@cogentaccountants.co.uk and we’ll be in touch.

Victor Korman
Managing Director
Cogent Accountants

The Finance Bill Sub-Committee of the House of Lords Economic Affairs Committee yesterday published it’s report: “Off-Payroll working: treating people fairly”. The findings and recommendations can be summarised as follows:

• It is right that everyone should pay their fair share of tax but IR35 is a flawed means of achieving that objective in the context of contractors and their Personal Service Companies (PSCs). The IR35 rules have never worked satisfactorily and HMRC have struggled to enforce them throughout their 20 year history. The existing regime is dysfunctional.
• The Government was right, at this extremely difficult time for the economy following the COVID-19 outbreak, to postpone by one year the extension of the Off-Payroll working rules to the private sector.
• Given the dysfunctionality of the IR35 regime, the Government must use the extra time to carry out a fundamental review of the legislation.
• The review should consider (i) the wider issues (not just the tax take), (ii) the costs to business of implementing the changes, and (iii) unintended behavioural consequences for the labour market (in particular, the gig economy).
• The review should also consider problems that have arisen from the implementation of the Off-Payroll working rules in the public sector, such as blanket status determinations, the loss of vital contractors who have migrated to the private sector and the unsatisfactory operation of the Check Employment Status for Tax (CEST) online tool. In particular, CEST does not give an answer in a substantial minority of cases, it does not reflect some important aspects of the case law and concludes that employment status applies in cases where it does not.
• Perhaps above all, the review should implement the recommendations of the Taylor Review of modern working practices and achieve a better alignment of tax and employment law. The Sub-Committee heard that many contractors had been left in an undesirable ‘halfway house’, in which they did not enjoy the rights that come with employment but were treated as employees for tax purposes. In short, they are ‘zero-rights employees’.
• Finally, the review should consider the alternative systems discussed in the report. These are (i) a flat rate withholding tax, (ii) the freelancer limited company, (iii) an ‘engager’s tax’, (iv) income tax / National Insurance Contributions (NICs) alignment, and (v) a statutory employment test.

This report will make very uncomfortable reading for the Government and HMRC!