Change is coming – the main question is when. This time, the change comes from Companies House.
These will be in relation to limited companies, quite specifically. These changes have been in the pipeline for quite some time. As we have previously mentioned, there are various issues around Companies House such as those relating to cloned umbrella companies. It looks like soon, that some of these issues will be addressed.
There are a range of measures, and some are aimed at better checking and verification of companies. Others focus on streamlining processes and ensuring compliance.
Issues such as the war in Ukraine have brought some of these potential changes to the fore. It has become increasingly important for oligarchs not to be seen to hide behind limited companies. Visibility of their assets have become of global importance, and it looks like this may facilitate change for everyone.
How this may impact you
Changes will mean that there is a verification process around company directors. This will also be done in retrospect, so existing companies will find the same measures apply to them too. For the vast majority of companies, this is not going to be an issue. They are true limited companies with a proper management structure in place.
However, hopefully what this will do, is to identify those who are not. No more hiding behind false names or structured tiers.
There are additional changes in the pipeline that will impact on some limited companies. The first is that they will be required to file digital accounts. Like with Making Tax Digital, this may affect some more than others. For those who are not particularly computer literate, this may be an issue.
Yet for most limited companies, it is likely to be a version of what they have been doing already. Contractors running their own micro or small limited company will need to do this too and will need to provide more information to Companies House.
The current requirement to post a balance sheet is likely to change for small, limited companies to posting a Profit & Loss sheet- it is unknown whether this will be required for micro-entities. Yet this is unlikely to be more than is required from HMRC already.
So, although the proposed changes are potentially quite minor, it is good to be aware. They could affect individual businesses in a range of ways that are unexpected. For example, it could be that the new ID verification will lead to a greater cost to limited companies. It could also be that the P&L sheet needs to be more detailed or is to partially become public knowledge.
There are various ways that this could affect even the most diligent of company directors. Either way, it is worth being aware. If a change is going to come, it is best to be ready for it.
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HMRC’s soft landing period has ended and IR35 enquiries will soon begin in the private sector. Make sure you identify any risk areas and ensure you’re managing it correctly.
A year after the IR35 changes - why you might want to raise your rates
When the IR35 rules changed for medium and large companies, the changes began with a 12-month initial period of easing in.
Well as of 6th April, this honeymoon period is most definitely over. However, it is not doom and gloom for contractors. It could be just what you need to refresh your rates for the future.
Here are 5 aspects that you might want to consider:
1. Impact of Brexit and the Pandemic
There has been significant impact on businesses in the aftermath of Brexit and the Pandemic.
For businesses many things simply cost more. However, companies know that contractors can be excellent value for money. There has also been a significant reduction in established contractors available in the UK during this period.
Many have taken permanent jobs in companies; others have moved elsewhere. This is something to take advantage of.
2. Rates, Rises and Cost of Living
Everything is going up in price. Not just for businesses but for everyday workers and contractors.
This is a time when rises are expected, and your rate rise would be one of many during this period. Although this is not a good time to increase rates in theory, it is likely anticipated. Also, if this is what you need to do to continue to be a contractor, then do not shy away from it.
3. You Are Worth It
Many contractors avoid putting up their rates for as long as possible. Perhaps you are one of those.
There does however inevitably become a time where this is necessary. It is important to remember that in this line of work, if you do not ask you will simply not get. There is no one looking out for you to get you a pay rise. In this type of working situation, it is all down to you.
If businesses come back to you again and again, they value your work. If they do this, then they must feel they are getting good value for money.
5. Give Fair Warning
It can be a good tactic to give companies who use you regularly a fair warning.
If it is April, let them know that your rates will be increasing in September. This gives them an opportunity to give you a contract in between so they feel they have got something extra for nothing. This is a surprisingly effective approach and can warm the company up to your rate rise.
Putting up your rates is a fair and expected part of business. There are good ways to do it without irritating your customers. No one will fight for you in business but yourself. Give yourself the rate rise you need to keep going, while being fair.