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UK bans new Huawei kit from end of year and existing kit from 5G networks by 2027

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UK bans new Huawei kit from end of year and existing kit from 5G networks by 2027

The government will ban the UK’s mobile providers from buying new Huawei equipment after December 31, and they must also remove all existing Huawei equipment from their 5G networks by 2027.

The Secretary of State for Digital, Culture, Media and Sport, Oliver Dowden, announced the decision to the House of Commons on Tuesday afternoon.  Existing Huawei equipment in 2G, 3G and 4G networks will not be required to be replaced and full-fibre broadband operators will be given two years to “transition” away from the purchase of Huawei hardware.

The move comes after the United States introduced rules requiring foreign microchip manufacturers using American chipmaking equipment to require a license before selling semiconductors to Huawei, a development that was seen as making it more likely that Huawei would be pushed into using less secure semiconductor suppliers.

Previous concerns over Huawei, which has links to the Chinese People’s Liberation Army and question marks over whether it is state owned, surrounded whether the Chinese state could install “backdoors” in Huawei equipment to enable mass surveillance of telephone conversations, emails and other digital communications over 5G networks.

Those concerns were considered largely unfounded by the UK intelligence services, leading to Boris Johnson’s government deciding to allow Huawei kit in the UK’s 5G network in January, capped at thirty-five per cent in the “core” network.  The change in US trade policy led to this decision being reassessed and now all Huawei equipment will need to be stripped out by 2027 at the latest.

Conservative rebels were quick to criticise the timescale, with Sir Iain Duncan Smith describing the delay as unacceptable and calling for Huawei to be removed from the network by 2025.  Rebel MPs have also argued that it needs to be taken out of the existing 3G and 4G network.

As many as 60 Tory MPs are prepared to rebel over Huawei and sign amendments to the Telecoms Infrastructure Bill later this year forcing the government to bring forward the 2027 date.  The rebels said they are “confident” of defeating the government, which has a majority of 80 seats.

Mr Dowden admitted the Huawei ban could delay the full roll-out of British 5G networks by two years and add hundreds of millions of pounds to the costs.

Just hours before the decision was announced, John Browne, the Huawei UK chairman, said he would step down from the position in September.  Lord Browne, who ran BP from 1995 to 2007, has been in the post for five years and is Huawei’s first independent chairman.

Ed Brewster, a spokesperson for Huawei, called the decision “disappointing”, saying it would “move Britain into the digital slow lane” and refuted suggestions that the new US policy would have made Huawei equipment less secure: “Instead of ‘levelling up’ the government is levelling down and we urge them to reconsider.  We remain confident that the new US restrictions would not have affected the resilience or security of the products we supply to the UK.

“Regrettably our future in the UK has become politicised; this is about US trade policy and not security.  Over the past 20 years, Huawei has focused on building a better-connected UK.  As a responsible business, we will continue to support our customers as we have always done.

“We will conduct a detailed review of what today’s announcement means for our business here and will work with the UK government to explain how we can continue to contribute to a better-connected Britain.”

The 5G decision represents a strategic victory for the US president, Donald Trump, whose administration has been urging Boris Johnson to kick Huawei out of Britain on security grounds for months.

UK officials however insisted that the decision was taken on “purely technical” grounds and was not the result of pressure from the White House.  The Tory China Research Group, including former party leader Iain Duncan Smith, had urged Mr Johnson to remove Huawei from the 5G network by 2023, a timetable deemed unrealistic by the telecoms industry.

The decision will also further strain relations between London and Beijing after Mr Johnson angered the Chinese leadership earlier in the month by offering UK citizenship to up to 3 million Hong Kong citizens with British overseas passports.

Chinese investment is widespread in the UK economy, from train companies to the nuclear power sector.  The Chinese ambassador to the UK said this month that Britain’s actions were being scrutinised for evidence that it could not run its foreign policy independently of the US.

“The China business community are all watching how you handle Huawei. If you get rid of Huawei it sends out a very bad message to other Chinese businesses,” Liu Xiaoming said.  “We want to be your friend.  We want to be your partner.  But if you want to make China a hostile country, you will have to bear the consequences.”

Julian David, CEO of techUK, said of the decision: “High quality and resilient 5G networks are essential to supercharge a levelled-up economic recovery.  Today’s decision, particularly on the timeframes, strikes the right balance between resilience and ensuring that the UK can maintain its position as a 5G leader.

“Pace is now key; the faster we can deploy these networks, the faster our regions, businesses and consumers can benefit from the step-change that 5G can deliver.

“Therefore, the government must ensure that it makes strategic and ambitious investments into OpenRAN technology and a National Telecoms Lab to diversify the telecoms supply base and continue to seek the best that global technology can offer.”

According to Neil Campling, head of TMT at Mirabaud Securities, 5G providers in the UK, in particular Vodafone, will not be derailed by the removal of Huawei equipment.

“Vodafone has said it would cost billions to rip out and replace Huawei and it would delay the rollout of 5G,” he said.  “Andrea Dona [Vodafone UK’s head of networks] said a Huawei ban would cost Vodafone ‘low-single-figure billions’ to swap out its thousands of Huawei stations and antennas across the country, according to Bloomberg.  This certainly feels like an exaggeration.”

“In February 2019, Vodafone had decided to pause any further developments of Huawei in the core across Europe.  The company had decided to replace Huawei in the areas deemed sensitive, such as the core, across Europe over a five-year timeframe, at a cost of approximately €200 million.  Vodafone have long argued for understanding the distinction between sensitive core and non-sensitive RAN (radio access networks).

“Industry returns are low, and Vodafone has said it cannot simply justify a large acceleration of [capital expenditure] to swap out modern 4G networks.  This would lead to a delay for 5G rollouts.  The idea ripping out Huawei in the UK would cost billions and billions seems sensationalist and perhaps, politically charged.  Overall, today’s statement is a watered-down risk relative to expectations and Vodafone is well positioned to navigate its way around policy changes.”

14th July 2020.

Eligible self-employed urged to claim SEISS grant before July 13 deadline

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Eligible self-employed urged to claim SEISS grant before July 13 deadline

Around 700,000 self-employed individuals who have yet to claim the government’s Self-Employed Income Support Scheme (SEISS) grant have today been urged to apply before the deadline next Monday by a freelancer industry body.

The Association of Independent Professionals and the Self-Employed (IPSE) cited data published on Sunday that revealed that over 2.7 million individuals have claimed the first SEISS grant so far, with the total value of claims standing at £7.7 billion.

However, the government initially identified some 3.4 million self-employed individuals as potentially eligible, meaning there are anywhere up to 700,000 self-employed people who have not made a claim.  Whilst some of those businesses may have ceased training or not been “adversely affected” by the Covid-19 pandemic, thousands of other potentially eligible applicants are yet to take advantage of the scheme.

The deadline for the first grant, which is paid in a single instalment covering eighty per cent of three months’ worth of profits, capped at £7,500 in total, is next Monday, July 13.  Applications can be made online.

Only self-employed sole traders or partnership members are eligible for the scheme.  Limited company contractors can claim for lost salary under the Coronavirus Job Retention Scheme if they are on furlough, but they cannot claim for dividends, much to the consternation of many.

Analysis of the government’s SEISS statistics suggests that while the average take-up of the scheme is now above seventy per cent, it has so far been lowest amongst younger freelancers aged between 16 and 24 (sixty-two per cent) and those over 65 (fifty-five per cent).  Women are also less likely to have taken up the grant, with sixty-six per cent claiming from the scheme so far compared to seventy-two per cent of men who are potentially eligible.

The government has announced a second SEISS grant will be available for businesses affected by the coronavirus on or after July 14.  Applicants will be able to make a claim from August 17.

Alasdair Hutchison, policy development manager at IPSE, said: “With days to go until the deadline on July 13, we are urging self-employed workers to double-check to see if they are eligible for the first SEISS grant.

“We would particularly encourage those freelancers in groups which have shown less take-up so far – particularly younger self-employed and women – to check their eligibility if their business has been affected so they can claim a grant.

“The deadline is also a reminder that SEISS has been a lifeline for millions of self-employed people.  We were pleased to see the scheme extended for a second time but urge the government to make it fair and flexible going forward to avoid financial cliff-edge come August and to extend help to groups who have been excluded from support, such as company directors.”

10th July 2020.

Online job adverts down by half

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Online job adverts down by half

The number of online job advertisements has dropped below half of the average for the same period last year, according to an “experimental” measure published by the Office for National Statistics.

The figures are yet another stark indicator of the havoc the Covid-19 pandemic has inflicted on the UK economy.  The total number of job adverts posted online fell by 4 per cent to 47 per cent of their 2019 average for the period June 26 to July 3, the ONS said on Thursday.  The data was taken from the job search engine Adzuna.

Job adverts in the IT, computing and software category fared slightly better than the average, but were still down to 60 per cent of last year’s volume, having dropped from a high of 90 per cent in June.  There were only 31.5 per cent of advertisements in the accounting and finance sector compared to the previous year.  Oil & gas vacancies were even lower, at 27 per cent.

The data is one of the ONS’s so-called faster indicators, experimental data sets collected by the statistics body to gauge the health of the economy, which also include shipping data from ports, high street shopper numbers and VAT returns.

The ONS said that the largest drop recorded by the Adzuna vacancy data was in the transport, logistics and warehouse sector, where there was a 12 per cent decline.  Adverts for domestic help were down by 10 per cent.  Adverts for graduate level positions remained at about 40 per cent of their average for last year.

Figures published by the Recruitment and Employment Confederation last week showed that in the last week of June, there were 990,000 active job postings in the UK, with 92,000 new job postings in the week of 22-28 June.

The coronavirus crisis has inflicted an unprecedented shock on the economy, the largest on record, with a 25 per cent contraction in April compared to February during the first full month of lockdown.

On Wednesday the chancellor announced a further £30 billion of measures to boost the economy, including a discount scheme to encourage consumers to eat out at restaurants and a £1,000 incentive for businesses to take employees back from furlough.  The schemes are an attempt to avert mass unemployment in the wake of the pandemic.

10th July 2020.

Gold prices hit nine-year high

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Gold prices hit nine-year high

The economic turmoil of the Covid-19 pandemic continued to shake markets on Wednesday as gold prices topped $1,800 for first time since 2011.

Gold is seen as a safe haven asset for investors due to the fact that the amount of above ground gold is fairly static.  However, because investment in gold does not attract interest, the markets usually favour gold as a “last chance saloon” store of wealth, and with interest rates at historic lows and government spending burgeoning, the current interest in the precious metal could be interpreted as a lack of faith in the stock and bond markets.

The London Gold Fixing breached $1,810 during afternoon trading, as data emerged showing that investors had plunged a record $40 billion into funds backed by gold during the first half of 2020.

Gold-backed exchange traded funds garnered net inflows of $5.6 billion in June, pushing global holdings to a new all-time high of 3,621 tonnes, worth more than $200 billion, according to data published by the World Gold Council this week.

The Covid-19 crisis has cemented gold’s position as one of the best performing major asset classes of this year, rising over nineteen per cent of its January value.  James Steel, chief precious metals analyst at HSBC, one of the world’s biggest bullion banks, told the Financial Times that prices “were already rallying well before the emergence of Covid-19”, which has further added to their momentum.

On Wednesday, gold miners were among the handful of notable winners in early deals: Centamin, the Egypt-focused producer, climbed 5¼p, or 2.9 per cent, to 188½p; and Fresnillo, the Mexican miner, advanced 12p, or 1.4 per cent, to 897¼p.

Gold took a hit in March, when the scale of the impact of Covid-19 started to become clear, as investors rushed to liquefy their assets.  Unprecedented fiscal stimulus and monetary support packages unveiled since then by governments and central banks have subsequently made the bond markets less attractive, with some US Treasuries now yielding negative returns.

Following official reactions to the pandemic, gold has benefited as a safe haven and a hedge against riskier assets, particularly after the ending of US lockdowns has seen localised spikes in Covid-19 breakouts.

“Fears of further increases in infections and related lockdown fears have been driving demand and thus prices,” said Carsten Menke of Swiss bank Julius Baer. “This suggests that short-term price risks remain skewed to the upside as long as the virus does not come under control.”

Gold investors are now asking themselves whether prices will surpass their record high of upwards of $1,900 per ounce in 2011.

“The health, financial and economic uncertainties generated by the Covid-19 pandemic and its aftermath are likely to continue to support gold’s rally well into 2021, but at a reduced level, we believe,” said HSBC’s Mr Steel.

He thinks prices could reach $1,845 by the end of this year before falling back to $1,705 in 2021.

8th July 2020.

Workforce wants to return to offices if Covid-19 vaccine discovered

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Workforce wants to return to offices if Covid-19 vaccine discovered

A recent survey has found that nearly the entire workforce prefers a return to office working should an effective Covid-19 vaccine be discovered.

The poll, by serviced office provider Office Space in Town (OSiT), revealed that ninety-five per cent of those surveyed favour a return to the office if a vaccination against Covid-19 becomes a reality, but would desire greater flexibility over their working hours in that event.

The survey also indicated that health concerns remain a major hurdle to a return to office working in the short term, with the findings identifying a “worker wishlist” of safety precautions that staff would expect in order to work comfortably and securely.

OSiT claim that the survey has uncovered “the hidden impact of lockdown remote working on wellbeing and health”.  With seventy per cent of respondents working from home, sixty-four per cent said that their companies had not offered practical guidance to enable them to make their homes compliant with health and safety regulations, with some respondents reporting cases of neck pain, back pain and shoulder complaints.

The research corresponds with a survey by the British Council for Offices (BCO) in May that found that just one in five (twenty per cent) of UK adults plan to primarily work from home in the future, and only sixteen per cent hope that home working replaces the office.

Twenty-nine per cent of respondents to the OSiT survey reported a lack of suitable equipment as a disadvantage to home working, whilst another twenty-nine per cent felt that loneliness was the biggest downside to working from home.  Thirty-seven per cent of those polled cited a lack of ability to disconnect from work at home as a major disadvantage, and a quarter (twenty-five per cent) reported feelings of anxiety.

With only eight per cent of respondents working from their normal office, just five per cent of those polled indicated a desire to be working remotely on a full-time basis if an effective vaccine is developed.  However, working from home during lockdown has had an effect on the expectations of office working: of the ninety-five per cent that do want to return to the office, over half (fifty-nine per cent) expressed a preference for greater flexibility in their working hours.

The findings also revealed a “worker wishlist” of safety measures that workers now expect in order to return to the office with confidence.  Over two-thirds of respondents expressed concern over contamination and over sixty per cent said that extra cleaning measures would make them feel more comfortable about working with others.  Fifty-two per cent would like to see social distancing markers in the workplace, a further fifty-two per cent expressed a requirement for face masks and gloves at the office, fifty per cent want hand sanitisers available at all desks and thirty-six per cent would like “sneeze screens” installed at their workplace.

The report indicated that there are, however, some benefits to home working: seventy-two per cent of those surveyed agreed that avoiding their commute was the main benefit to working from home and fifty-four per cent indicated that spending more time with their family was another major benefit.  Key disadvantages were missing out on collaboration with colleagues (thirty-two per cent) and the increase in distractions (forty-two per cent).  Fifty-two per cent of respondents felt that working from home did not improve their work-life balance, whilst thirty-four per cent said a key drawback to home working was the lack of a dedicated workstation.

Commenting on the results, Niki Fuchs, managing director of OSiT, said: “The survey results show that, given the chance, people would significantly prefer to be in the office.  It seems that working from home is neither a sustainable option for the majority of people nor for their employers.  We thrive on the water cooler moments, in-person collaboration and development opportunities cultivated in the physical office, where a professionalised environment fosters productivity and community.

“The potential cost of permanent remote working to workers’ wellbeing and health is also concerning, with these results indicating issues from a lack of dedicated space and suitable working equipment to the mental health impact of blurred work-life boundaries, which are not simply going to disappear in the longer term.

“As we all look ahead to getting back to the office safely, employers and office providers should remember they have a responsibility to ensure people feel comfortable to return to work.  The steps unveiled in this survey offer a simple, realisable roadmap for this – provide a clean environment and offer flexible hours to encourage people back to the office and back to normality.  It’s what the majority of workers want – so, let’s deliver it for them.”

7th July 2020.

Sunak to slash stamp duty in Summer Statement

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Sunak to slash stamp duty in Summer Statement

Chancellor of the Exchequer Rishi Sunak will announce a range of economic stimulus measures this Wednesday in a Summer Statement, although Treasury sources insist that the statement “is not a Budget or a mini-Budget”, with Mr Sunak expected to refrain from implementing major policy changes such as tax cuts or spending commitments.

The expected headline proposal, according to reports in The Times, will be a temporary raising of the stamp duty threshold from £125,000 to “as much as £500,000”, which is anticipated to be implemented in the autumn Budget.  The measure is intended to stimulate the housing market, which has been hit hard by the Covid-19 pandemic, with house prices falling year on year in June for the first time since December 2012.

Other emergency measures expected to be announced to support the economy are a temporary VAT cut for pubs, restaurants and cafés, a £1,000 grant given to companies for every apprentice that they take on and a multimillion-pound “green jobs” package in an attempt to mitigate mass lay-offs once the furlough scheme comes to an end.  £100 million will also be invested by the government in traineeships to help young people find work.

The plans for a “stamp duty holiday” are intended to help first-time buyers get onto the housing ladder and will disproportionately benefit voters in “red wall” seats that the Conservatives won from Labour at the last general election.  Government sources said any increased stamp duty threshold may last for up to a year.  If the threshold were raised to £500,000, this would represent a saving of £2,140 on an average house purchase of £232,000.

Paul Johnson, director of the Institute for Fiscal Studies, the think-tank, said that there was a “good chance” that the chancellor’s plans would be effective in the short term.  “The housing market is very thin,” he said.  “Anything which gets it moving would potentially help. Much better would be to abolish stamp duty altogether.  It is a terrible tax that keeps people stuck in houses.”

Reports in the Financial Times indicated Treasury sources were keen to play down the importance of the Summer Statement, which has been seen to have been exaggerated by Number 10.  The statement has been repeatedly referred to as a “mini-Budget” by several newspapers.

“We will be taking stock of the economic situation, and looking at if and where further support makes sense ahead of the more significant moments in the autumn,” the department said.

A lack of spending growth since the lockdown restrictions have been started to be eased has caused disappointment at the Treasury and made key decision-making more difficult.  The opinion at the department is that any stimulus should be timed for when the economy is fully open for business later in the year.  The autumn Budget is expected to be held in October, to coincide with the winding down of the Coronavirus Job Retention Scheme.

On Sunday the government announced a £1.57 billion support package for the struggling arts sector.

6th July 2020.

No cheer for freelancers in Finance Bill vote

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No cheer for freelancers in Finance Bill vote

Labour came under fire from the freelance sector on Wednesday night after abstaining from a crucial vote on an amendment to the Finance Bill that would have limited the scope of the controversial 2019 Loan Charge.

The amendment, New Clause 31 (NC31), tabled by Conservative MP David Davis, would have meant that the Loan Charge only applies before the 2015-16 financial year in cases where the taxpayer knew that their loans should have been declared as income, but deliberately did not include them on their tax return – in effect limiting the retrospective nature of the levy to only apply in cases of deliberate tax evasion.

However, due to Labour being whipped to abstain on NC31, even in spite of Labour leader Sir Keir Starmer receiving an email from a desperate taxpayer who said they were “ready to end their life” if Labour didn’t support the amendment, and with the Conservatives likely to vote overwhelmingly against it, the amendment was not moved and thus did not even make it to a vote.   Another amendment, New Clause 1 (NC1), tabled by the Scottish National Party (SNP), calling for a report on the effect of the Loan Charge, was defeated by 321 votes to 232.

Another amendment of significant relevance to the freelance sector, that would have seen the delay of the extension of IR35 reforms, also known as the Off-Payroll rules, to the private sector for further two years until 2023-24, was also voted down by 317 votes to 254.

The Loan Charge has reportedly led to affected taxpayers committing suicide, a matter raised by David Davis: “​The loan charge destroys lives.  To date, at least seven people have taken their own lives as a result of this unfair and retrospective policy.”

Financial secretary to the Treasury, Jesse Norman, replied disputing that HMRC was responsible, in at least four such deaths: “The circumstances surrounding those deaths have been considered by the coroner, the Independent Office for Police Conduct and HMRC’s own internal independent investigations.  None of them has suggested, in these four reports, that HMRC is to blame for these deaths; no conduct issues have identified either by the independent office or internal investigations that would warrant disciplinary actions.”

Extraordinarily, when Ruth Cadbury, co-chair of the Loan Charge All-Party Parliamentary Group (APPG) and Labour MP for Brentford and Isleworth, asked to interject, potentially to question the minister on HMRC’s culpability in the remaining three deaths, Mr Norman denied her the opportunity, telling her: “I am afraid that I just have to press on, because I have no time.”

On a day that Parliament had condemned China for introducing a new security law in Hong Kong, which “will have a chilling effect on democracy”, commentators lambasted the House of Commons for failing to vote on Loan Charge amendment NC31.  Sir Ed Davey, co-chair of the Loan Charge APPG and acting co-leader of the Liberal Democrats, tweeted: “Been lobbying Speaker’s Office for a vote on NC31 on #LoanCharge.  They now agreed that if SNP don’t push their amendment, we can get a vote on loan charge.  Trying every trick in the book to get a vote on the #LoanChargeScandal.  Alarmed at how Parliament is preventing this vote.”

Greg Wright, deputy business editor of the Yorkshire Post, who has been highly critical of the policy, replied to Sir Ed: “As you all know, I’m not personally affected by this issue.  But I feel physically sick watching this.  If there is no vote, what’s the point in Parliamentary democracy?  A dark day.”

Wednesday night’s session in the Commons is the clearest signal yet to contractors that the Loan Charge will remain in its current form, and that the Off-Payroll rules can be expected to be implemented in the private sector as planned next April.

The Loan Charge Action Group (LCAG) responded: “Very sorry to announce that cross-party NC31 was not called for a vote.

“Extraordinary considering that there were over 50 MPs on it.  Thousands of people will feel badly let down by the House of Commons tonight.  We hope that the House of Lords will raise the Loan Charge now.”

Keith Gordon QC, an expert in and key critic of the Loan Charge, tweeted: “I fear that the loan charge amendments are now dead.  I am so sorry.

Despite all the efforts of [Sir Ed Davey] the executive is riding roughshod over the will of the people and the will of Parliament.  This is a very sad day indeed.”

In respect of the IR35 reforms, the Stop The Off-Payroll Tax said: “It is very disappointing that after four years of campaigning we have not achieved the primary aim of stopping this legislation.

“We, and our 4,000 campaigners, did everything we could – and the Lords report, from their inquiry into the so-called reforms, accurately detailed the damaging effect these changes will have on the UK’s flexible workforce.

“We are delighted that MPs tabled amendments to the Finance Bill, to prevent the damage, but sadly our MPs chose not to back them in sufficient numbers.”

IR35 consultancy Qdos Contractor said: “IR35 reform in the private sector has effectively now been signed off and will arrive in April 2021.

“Despite concerns raised by a number of MPs, who rightly exposed the flaws of this legislation and made it clear they do not believe changes are necessary, it seems there’s no turning back now.”

One contractor tweeted the Labour Party: “What did you get in return for your abstinence of NC31?  I want to know what noble cause my life is being put under the bus for.”

The next stage of the Finance Bill is the third reading in the Commons, after which it will be scrutinised in the House of Lords before the final consideration of amendments.

2nd July 2020.

‘You owe us beers’: Doubts raised over impartiality of Loan Charge review

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’You owe us beers’: Doubts raised over impartiality of Loan Charge review

The objectivity of the government’s supposedly independent review of the 2019 Loan Charge has been called into question following the release of a series of emails under the Freedom of Information Act (FOI) that appear to show a degree of collusion between HM Treasury and the team leading the review, headed by Sir Amyas Morse.

In one email, the permanent secretary of HM Treasury, Sir Tom Scholar, thanks Sir Amyas for “steering [the review] to a conclusion”.  In another exchange, a review team staff member who is also a senior Treasury official agrees to buy beers for the Chancellor’s press secretary for help finding someone to help with incoming press enquiries.

The 2019 Loan Charge targets users of “disguised remuneration” tax avoidance schemes, which mitigated tax by paying participants via tax-free loans.  Such loan schemes, ostensibly legal at the time they were used, were widely used by contractors to circumvent the IR35 rules.  The Loan Charge was introduced to prohibit loan schemes but, controversially, can be applied to historic payments received via the schemes.

The result is that this financial year, many loan scheme users are being charged income tax and National Insurance on several years’ earnings in one lump sum, resulting in crippling liabilities.  When the Loan Charge was drafted, it was designed to be applicable to payments made up to twenty years ago.  The resulting furore led to the government agreeing to review the policy, a process that was supposed to be independent of the Treasury.

Sir Amyas Morse, former head of the National Audit Office, led the review.  One of the recommendations of his report was to limit the scope of the Loan Charge to December 2010, when legislation was passed intended to prohibit loan schemes (that legislation was, however, easily bypassed by subsequent loan schemes).  The review has repeatedly been referred to as “independent” by the government.

The emails exposed by the recent FOI requests were passed to the Loan Charge All-Party Parliamentary Group (APPG), a cross-party group of MPs and peers, who published a report on Monday entitled Exposing HMRC interference in the supposedly ‘independent’ Loan Charge Review: The Truth as revealed by Freedom of Information.  The APPG’s report claims that the emails are evidence that “[the] Morse Review was not independent and [that] HMRC and the Treasury interfered from start to finish”.

The Loan Charge APPG stress that they are making no criticism of Sir Amyas or his delivery of the review in what they call “an unreasonably short timeframe”, rather they claim that interference by the Treasury and HM Revenue & Customs has “rendered the already flawed report conclusions as unsound”, noting that Sir Amyas’ team was comprised entirely of Treasury and HMRC staff.

The APPG also note that HMRC initially refused to comply with the FOI requests and later attempted to stall them.  MPs are due to vote on an amendment to the Finance Bill, New Clause 31, on Wednesday that would further limit the scope of the Loan Charge to apply from 2016 onwards except in cases of deliberate tax evasion.

In light of the emails disclosed under FOI, the main charges that the APPG make in respect of the Morse Review are that the Treasury and HMRC sought to influence the review, the review secretariat had an improperly close working relationship with Treasury and HMRC staff, there was cooperation between the Treasury/HMRC and the review in dealing with the press, the Treasury sought to influence the choice of expert witnesses, and the Treasury and HMRC were afforded “privileged early access to the report’s conclusions”.

“The information exposed by Freedom of Information responses clearly shows that the review commissioned by the government and presented as independent was, in reality, nothing of the sort,” said Sir Ed Davey, acting Lib Dem co-leader and co-chair of the Loan Charge APPG.  “There was a clear attempt by HMRC and the Treasury to interfere and to direct it from start to finish.  We make clear we make no criticism of Sir Amyas Morse, but his review was set up in such a way so as to make an independent review impossible.

“There was clear and inappropriate interference from the two governmental bodies which were being reviewed.  The flawed conclusion of the review must be rejected and Parliament must seek to resolve the Loan Charge Scandal properly.”

Ruth Cadbury MP, also co-chair of the Loan Charge APPG, commented: “We now know that the Chancellor’s own press secretary was involved in dealing with press enquiries to the review and that there was an inappropriately close relationship between the review secretariat team, made up of Treasury and HMRC staff, and the Treasury and HMRC, whose policy the review was scrutinising.

“This shatters any illusion of genuine independence and the fact is that this review fails even basic tests of how an independent review should operate.  Now it is clear that the conclusion of the Morse Review cannot be relied on, it is up to MPs to do the right thing and to remove the retrospective Loan Charge for everyone other than those for whom HMRC can prove they were deliberate tax evaders”.

Sir Mike Penning MP, third co-chair of the Loan Charge APPG, said: “Colleagues from across the House of Commons have consistently expressed their opposition against retrospective legislation, but the now discredited Morse Review recommends that retrospection back to 2010 should remain.

“This recommendation is flawed and it doesn’t address the basic injustice of this clearly retrospective legislation.  So we hope that finally Ministers will agree that the retrospective nature of the Loan Charge is wrong and accept the amendment to the Finance Bill to tackle this and allow thousands of people to have the chance to defend themselves in the normal way they are entitled to within our legal system”.

1st July 2020.

Consultancy finds 87% of contractors are ‘outside IR35’

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Consultancy finds 87% of contractors are ‘outside IR35’

A leading consultancy that specialises in IR35 has revealed that nearly nine in ten contractors that have used its IR35 status checker service since the Off-Payroll rules were introduced were assessed to be operating on a self-employed basis.

Qdos Contractor, founded as a tax consultancy firm in 1988, launched their status review service for recruitment agencies and end clients hiring contractors under the Off-Payroll working rules as an alternative to HM Revenue & Customs’ widely lambasted Check Employment Status for Tax tool.

The published data showed that, of 9,000 individual contractors tested, eighty-seven per cent were found to be self-employed, or “outside IR35”.  The results are significant because the Off-Payroll rules have led many end-clients to apply so-called “blanket” assessments and classify all of their contractors as “inside IR35” to mitigate their own tax risk.  Under the rules, taxing a contractor as employed when they are working under self-employed terms and conditions is non-compliant.

The Off-Payroll rules, also known as IR35 reform, modify the application of IR35 by making the hirers of contractors responsible for assessing the IR35 status of the contractors they engage.  Any contractors determined to be employed for tax purposes must have PAYE income tax and National Insurance deducted from their payments at source by the “fee payer”, which is usually their recruitment agency.  Off-Payroll has been in operation in the public sector since April 2017.  The rules were due to be rolled-out to the private sector in April of this year, but were postponed for twelve months at the last minute due to the Covid-19 pandemic.

Qdos CEO Seb Maley said: “Now, with less than a year until the changes arrive in the private sector, it’s vital that companies yet to start preparing do so [prioritise accurate status returns] immediately.  Meanwhile, firms banning contractors, forcing them onto the payroll as a workaround to the changes, should rethink their stance on IR35 reform.”

A number of major hirers of contractors, including all “big four” banks, Vodafone and BAE systems, placed blanket bans on contractors in the run up to April, an indication of the apprehension that the rules have caused for hirers of contractors.  Not only do the reforms place the burden of IR35 assessment upon end-clients, but should the end-client make the wrong decision, the supply chain is potentially liable for the tax risk.

In December 2019, Stephen Ratcliffe, a partner at multinational law firm Baker McKenzie, told HRReview that ninety per cent of contractors are caught by the IR35 rules.  HMRC have said that they estimate that only ten per cent of people who are caught by IR35 actually pay the right amount of tax and National Insurance.  The statistics revealed by Qdos may cast doubt on the accuracy of such approximations.

30th June 2020.

Confidence in UK’s tech sector remains strong

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Confidence in UK’s tech sector remains strong

The global economic upheaval caused by the Covid-19 pandemic has failed to dent confidence in the UK’s tech industry, research by major IT job board CWJobs has shown.

The CWJobs Confidence Index 2020 revealed that confidence in the state of the UK tech industry had dropped only slightly since last year’s survey, with eighty-one per cent of respondents indicating that they had confidence in the sector, a decrease of only eight per cent year on year despite the global health crisis.  The report said that the results highlighted “a continual and stable overall outlook”.

When looking towards the future, over three quarters (seventy-seven per cent) of respondents indicated that they had confidence in the state of the UK tech industry in twelve months’ time, and nearly nine in ten (eighty-five per cent) had confidence in the state of the sector in five years’ time.

The strength of skills within the industry was the top aspect driving current confidence in the tech sector for the second consecutive year, with confidence in skills rising slightly from thirty-five per cent in 2019 to thirty-seven per cent this year. Looking over the longer-term, whilst last year skills were considered the top aspect driving the future of the industry (at thirty-six per cent), this year technology being produced now represents the point of most confidence for the future (twenty-nine per cent), closely followed by skills (twenty-nine per cent) and the UK’s status as a leader in IT (twenty-seven per cent).

Unsurprisingly, Covid-19 dominated concerns about the industry, with over half of respondents (fifty-two per cent) indicating that they were concerned about the state of the post-coronavirus economy, replacing Brexit as the main concern from last year. Forty-four per cent believed that Covid-19 has been detrimental to their company.

The findings also illustrated the importance of the sector amid the Covid-19 outbreak: three quarters of those polled (seventy-five per cent) agreed that IT/tech has been vital in keeping companies afloat during the lockdown.  Forty-four per cent of IT professionals surveyed and forty-nine per cent of IT decision makers believed that their organisation will increase their tech budget in the future due to new insights learned from Covid-19.

Of those respondents who worked at a company where employees worked remotely, the top five most time-consuming tasks related to the Covid-19 outbreak were:

  1. Setting up people to work remotely (44%)
  2. Dealing with teething issues from people working remotely (41%)
  3. Educating people in how to work remotely effectively (38%)
  4. Implementing additional security measures as people work remotely (27%)
  5. Implementing new software to enable people to work remotely (24%)

When asked about the specialisms currently needed to succeed in the tech industry, the professionals and decision makers surveyed said the top skills remain general IT (thirty-nine per cent), cyber security (thirty-six per cent) and cloud (thirty-two per cent).  The importance of general IT skills rose by six per cent year on year suggesting an impact on confidence levels as organisations work from home. The report said that this “reflects what [has been] witnessed with job applications and job postings across the CWJobs website”.

In the long-term, AI topped the list of in-demand skills, with thirty-seven per cent of respondents indicating that skills in AI would become highly sought after.  Cyber security and cloud were again second and third in the ranking of skills that would be required in the future.

Dominic Harvey, director at CWJobs said: “It’s not a huge surprise to see that Covid-19 has had an impact on the tech industry, much like the rest of the business world.  However, it is good to see overall confidence in the sector remains high and that is justified by the vital role the industry has played in keeping UK businesses running and providing integral support to those operating on the front line.

“Despite this being a tough time at the moment, the UK’s tech scene is being recognised for the role it’s playing, and could be set to be in a good enough place to kick on once the pandemic subsides if IT budgets are increased.  Until then, it’s clear IT professionals are focused on providing the support they can and ensuring they have the right skills in place to keep things running now, before expanding in the future as everything gets back on track.”

Steve Ward, UK director at Universum, commented: “These are interesting times, indeed, both for the wider job market and the tech industry.  Understandably, the situation around Covid-19 is having a knock-on effect for confidence in the current tech job market.  However, as revealed through this research, the IT sector has clearly risen to the increased demand for efficient services and supporting products that enable the UK workforce to try and maintain operations on a remote basis.

“The industry recognises the incredible efforts its workers have contributed to the pandemic and there remains a demand for workers with  IT or tech skills to help deliver change.  What is clear in these times, is that tech talent is integral to shaping the future of work and therefore as employers, we need to understand how we value and demonstrate appreciation for these employees as their skills reach peak demand.”

Julian David, CEO of techUK, added: “The UK has always had a historically strong technology industry.  However, like any other sector it is affected by the economic uncertainty we are currently experiencing.

“The data published … showing that confidence remains high provides some reassurance but our approach to the next phase in our response to this crisis will be crucial.”

The research was conducted by Censuswide on behalf of CWJobs, polling 502 UK IT decision makers and 1,002 UK IT professionals in April 2020.

24th June 2020.

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