The research confirmed that 700 permanent IT and finance employees were studied to look into the attitudes of employees in these sectors. The results confirmed that there are many companies now from emerging markets countries who are seeking to offer employment opportunities to professional staff in the UK offering better remuneration packages, which may leave more work open to contractors in IT and finance in the UK.

More than half of professionals in each sector stated that they believe that UK companies may soon need to tackle serious competition from the rest of the world, and that they may need to increase remuneration packages to keep up with what is being offered elsewhere in the world.

Staff who were questioned confirmed that one of the major factors in whether they were happy at work was a good work-life balance, while many other stated incentives for overtime and bonus schemes would help to keep them loyal to their firms. However this is fantastic news for contractors who do not require such benefits in return for their services, as they will once again become more favourable over permanent staff.

Contractors and small businesses are extremely angry at this recent discovery, as the government have recently been cracking down on such ventures in the contracting sector to prevent tax avoidance.

The letter that was discovered dated April 25th confirmed that there are more than two thousand civil servants who are being paid off the payroll, all of whom are earning almost £60k per annum. The letter was addressed to the treasury after a review of government employees remuneration. More than eighty percent of the public sector workers had been taken on for contracts lasting more than six months, and more than 75% earned almost £400 per day.

The letter also confirmed that the chief secretary intends on introducing new rules to prevent tax avoidance, and that all senior public sector workers should be remunerated via the payroll, just like all lower level civil servants.

Experts have commented on the figures stating that they believe that the banking sector contracts are somewhat responsible, as they have required management and IT experts to assist in the restructuring of the businesses as new rules have been introduced by the government.

The figures also confirmed that the highest growth levels came from the manufacturing sector, as IT and management contractors have been employed in order to assist in the improvement of their efficiency levels, with more than twenty percent of contracting business coming from this sector.

The chief executive of the MCA commented and stated that he feels that the contracting sectors in the UK are showing signs of recovery, although it will be a long a drawn out process. Contractors should be ready for a long period of lower fees, but as the UK economy begins to recover the fees are likely to be higher again in the future.

Once the fake client confirms that they wish to take on the fake contractor and confirm that the work has commenced, the agency pays the contractor and awaits the funds from the client, but of course the funds are never reclaimed by the agency.

News of the contractor scam surfaced after several agencies began reporting that they had been scammed in such a way. When they tried to chase up payment from the ‘client’, they were unable to locate them and were left out of pocket.

Agencies are being advised that they should always perform checks on potential clients before agreeing to any terms to ensure that they are legitimate, and to ensure that contractors are not paid without the client first making a payment to the agency.

The measures put in place by the government last month included binning questionnaires about pre-qualification and more, and Maude claims that the new measures have been making a difference to contractors bidding on public sector contracts.

However, this seems to be contradicted by reports from contractors in the UK. Almost half of small business owners and contractors who bid on government contracts are claiming that the bidding process for such contracts is too complicated, and 30% of contractors say that they feel they are not selected and that larger firms are favoured.

Contractor experts and representatives such as PCG have commented that they feel that it is time that the government started to award their contracts to smaller firms and contractors in the UK in order to assist with economic growth and to help smaller firms to stay afloat in these difficult times. They say that more often than not, smaller firms and contractors also charge lower fees in order to try and win the additional contract work, and that they are just a reliable as larger national firms.

Contractor experts have blamed the rise in outstanding invoices on the poor economic climate that continues to grip the country, with many firms cutting out freelancers since AWR and IR35 rules in recent months.

Some advice has been released to help contractors in the UK who are affected by this issue. The first thing to decipher is whether your client agrees that the invoice remains due, and whether they cannot pay the invoice for whatever reason, or will not pay because they dispute the invoice. This will determine what course of action you must take in order to claim the money that is owed to your for the work that you have completed.

If you are owed less than £5,000, the claim can be dealt with via the small claims court. If the unpaid invoice amounts to more than £5,000 and you are unable to settle the claim directly with the client, your best bet is to seek a solicitor who can deal with the claim. The costs of the solicitor can be claimed for on top of the outstanding invoice, as can any interest depending on how long you’ve been waiting.

It is essential for contractors to first establish whether they are a service company, and if so they will need to check whether they are caught by IR35 or the MSC regulations. In order to determine whether a contractor is classed as a service company, they must ask themselves whether they conduct services for the client and whether at any point, the services were offered by someone who was a shareholder or partner in the client company. They must also determine whether the service company’s income mainly came from services offered by a shareholder or partner.

So in simple terms, if you provide a service rather than goods and if your income comes from work done by the shareholders or partners personally, you are classed as a service company. In many cases, this applies to contractors who are working alone and are the sole earners.

If you require assistance with annual returns, the advice is to speak to your contractor accountants who will be able to assist with any documents that must be filed with HMRC and Companies House.

At an IR35 forum which took place on April 26th, a HMRC spokesperson confirmed that the new guidance notes and business test which is being launched to assist contractors will be available on the HMRC website as of 7th May, two weeks earlier than was originally intended.

The business test will consist of a set of questions that the contractor should answer honestly in order to determine the level of risk that they are exposed to in relation to IR35 legislation. The guidance notes will then detail information on how best to apply the business test to the contractor’s individual circumstances.

Also on the site there will be six IR35 scenarios released, which will be a range of case studies as examples to assist contractors in figuring out whether they may be caught by the IR35 rules. The test has been in development stages for some time, and although there were issues surrounding its wording in the early stages, the final test has now been agreed and is due to be launched.

He commented that he does not agree with the chancellor’s view that this kind of tax avoidance should be grouped with tax evasion, however he did say that he felt that setting up a limited company purely to avoid tax was immoral.

Cameron stated that there is a difference between tax avoidance and evasion, however that he felt that aggressive tax avoidance schemes such as contractors setting up a limited company purely to avoid tax bills was wrong and that contractors should not be doing it.

The row over tax avoidance by conducting business as a limited company has been going on for some months now, and it links in with IR35 and other tax regimes that have been put in place to prevent contractors from saving on taxes by working as a ‘disguised employee’.

The survey also suggested that almost half of small business owners and contractors anticipate a need to continue working and delaying retiring from their positions, and almost 10% expect to have to sell their companies or close the business altogether. More than 50% of those who expected to have to sell or close up had reported that their income had vastly reduced over the past 12 months.

On the flip side of this report, the other half of contractors who owned their own business said that they remained confident that they can continue to run their business as normal and to retire at the state retirement age of 65, while a further 18% expect to retire between age 65 and 70.

In recent years, pension planning have become a concern for many advisers and contractors, with nearly a third of contractors running small businesses expecting to find it difficult to live on their income when they retire. Many business owners also said that should they become unable to work due to injury or sickness, they may have to close their business as their income would completely stop. This highlights an issue with many contractors not putting enough money away for financial changes such as retirement and illness, which is a major concern in the UK.