Budget 2008

Relevant points of note

On March 12th the Chancellor of the Exchequer, Alistair Darling, delivered his first budget amid a potential economic downturn, 'credit crunch' and recent Northern Rock crisis.

A more general overview is available from our accountants on the previous news link, Budget Overview 2008, however we are now able to highlight the areas which effect our industry, in more detail, thanks to Haley Morbin of APSCo

As expected, there were reforms announced to close perceived tax 'loopholes', to simplify the taxation system, to increase spending on skills, and better management of large scale public sector IT programmes.

Of most relevance to Inspired Recruitment, and those using our service, in terms of taxation reforms is Chapter 4, entitled Fairness and Opportunity for All and the detailed documents from HMRC.

The key points from Chapter 4 to note are:

• Para 4.54 "The staff hire concession, which currently allows employment businesses to charge VAT solely on the margin of their supplies, will be withdrawn by HMRC with effect from 1 April 2009." Technical note on this and the impact assessment.
  
  
• Para. 4.70 "The Government is concerned at the growing use of structures, such as "umbrella companies" or overarching contracts of employment with employment businesses, to obtain tax relief for travel expenses that would not be available to other workers. It will monitor the use of these structures and, if necessary, consider action in the future."
  
  
• Update from HMRC on improving tax anti avoidance measures, available here.
  
  
• The publication of consultation document entitled: "Improving collection of National Insurance Contributions from the self-employed", available here.
  
  
• A review of HMRC's powers, deterrents and safeguards, including a modernised approach to compliance checks and assessing errors across income tax, CGT, corporation tax, PAYE, VAT and NICs, and changes to make it 'easier' for taxpayers to pay what they owe on time.
  
  
• Future consultations on improving tax administration, including aligning penalties for the late filing of tax returns, and simplifying the rules paid late and on repayments of overpaid tax.
  
  
• Chapter 3 of the Budget, entitled 'Sustainable growth and prosperity', available here, laid out the Government's plans for increase in spending on skills including detail on the £60 million further investment over the next 5 years, additional apprenticeships. In terms of improving engineering and technology skills, the budget states:
  
  
• Para 3.27 "Good progress is being made in the implementation the Sainsbury Review recommendations. The Technology Strategy Board (TSB) is delivering on its leadership role and will shortly publish its strategy, including joint initiatives with the Regional Development Agencies and Research Councils and programmes to support innovation across a wider range of sectors. The Department for Innovation, Universities and Skills (DIUS) will pilot a reformed Small Business Research Initiative (SBRI) with the Ministry of Defence, Department of Health and other selected partners, prior to wider roll-out in 2009. DIUS and the Department for Children, Schools and Families (DCSF) are delivering a new campaign on Science, Technology, Engineering and Mathematics (STEM) skills, including a new £6 million communications campaign, working towards better careers guidance for pupils, and planning for a National Science Competition from 2008-09."
  
  
• Chapter 5, entitled 'Stronger Communities and Effective Public Services' announces the publication of the Public Value Programme, which will specifically look at the way in which "major public sector IT projects are run and accounted for".