What Spring Statement 2019 offers freelance creatives

Hearing from the chancellor yesterday that Britain must “apply the creativity of the marketplace” may have excited creative freelancers that they were set for an innovation-supporting Spring Statement 2019.

But it is the advisers of freelancers who were last night having to apply some creativity of their own, to come up with anything from Philip Hammond that looks vaguely supportive, or even merely affecting, of self-employed creatives.

As Daniel Mepham at SG Accounting put it to FreelanceUK: “There was almost nothing new [from Mr Hammond] of a micro-economic nature for freelancers…[mainly because] everything is up in the air with Brexit.”

Or as digital design firm Studio Graphene’s founder Ritam Gandhi cautioned: “The Spring Statement was light on substance, with many of the UK’s industries not mentioned.”

On first glance, the creative industries do unfortunately appear to be one of the chancellor's ‘unmentioned’ industries.

However, three distinct Spring Statement announcements potentially impact sole traders, the self-employed and/or freelance consultancies, regardless of industry. And another trio actually hold implications for the creative industries; albeit not exclusively.

With relevance to independent, sole-person or micro-businesses, the three key Spring Statement announcements are:

1. Anti-late payment plan

Ahead of the government’s response to a consultation on how to tackle late payment by large outfits to their much smaller suppliers, the chancellor said he would take the “first step.”

Mr Hammond says the audit committees of listed firms will be required to report on payment performance via a non-executive director, and must log progress in their annual accounts.

So the government is going to bring into “sharper focus” big businesses that “put the squeeze on their suppliers by paying them late,” said a pleased Kingston Smith, a chartered accountancy firm.

Another tax advisory, Nixon Williams, which specialises in serving single-person businesses, said: “The government plan to do more to tackle the problem of late payments to small businesses… is a much welcomed first-step in helping to safeguard the financial interests of British contractors, freelancers and the self-employed, who can often be at the mercy of big business supply-chains.

“Not only will it help ease cashflow – the lifeblood of a small business – but it will also allow more time to focus on business growth; potentially reduce the need to rely on credit facilities or overdrafts, and provide a boost to the UK economy.”

Business lobbyist the Institute of Directors says it is “delighted” that late payments are going to be tackled.

“This is a thorn in the side for many small firms, and the reform will ensure the issue gains the board-level attention it deserves at big companies, without compromising good corporate governance.”  

2. Making Tax Digital reprieve

Published yesterday, ‘Spring Statement 2019: Written Ministerial Statement’ makes clear in a section entitled ‘Maintaining the tax system’ that the government is sticking to its timetable on Making Tax Digital.

It says: “Mandatory digital record keeping for VAT for businesses over the VAT threshold (with turnover over £85,000) comes into force from 1 April. This is an important first step in this modernisation of the tax system to which the government remains committed.”

But placating enterprise-support groups and tax experts, the government also confirmed that digital tax accounts would not be rolled out to other taxes – or businesses – in 2020.

“We welcome the announcement that, in practice, MTD will not be further extended until at least April 2021, either to bring income tax within the scope of MTD, or businesses who are voluntarily registered for VAT,” said the Chartered Institute of Taxation.

The CIOT added: “While some of the requirements of MTD apply from 1 April 2019, this is not the deadline for enrolling into MTD. For many businesses the deadline for signing up may be nearer the beginning of August 2019.

“Businesses need to enrol into MTD for VAT at the right time, and only when they are confident that they can submit their next VAT return using MTD-compatible software, otherwise significant problems can arise.”

So in short, the advice is ‘don’t sign up before you are ready’ – despite the April 1st commencement date for some traders being just over a fortnight away.

As well as welcoming the MTD-related “breathing space” for some, the institute’s Adrian Rudd welcomed another confirmation in Spring Statement -- that HMRC would be taking a ‘light-touch’ approach with MTD penalties.

3. Making Tax (returns) less taxing

In a boon to the many sole traders who know how modifying a mistake on a tax return can be less than straightforward, the government's response to a call for evidence on simplifying the self-assessment form amendment process will be published shortly.

With relevance to the UK’s creative industries, Spring Statement 2019 announces the following trio:

  • Immigration ‘sweeteners’

Vocally unhappy about the government’s post-Brexit immigration blueprint, the creative industries are likely to regard two new policies as a step towards easing their talent-supply concerns.

Firstly, from this autumn, PhD-level occupations will be exempt from the Tier 2 (General) cap. Scientists and researchers (and their engagers) are the likely beneficiaries.

To support the exemption, the government will update the immigration rules on 180-day absences so that researchers conducting fieldwork overseas are not penalised if they apply to settle in the UK.

Secondly, from June 2019, citizens of the US, Canada, New Zealand, Australia, Japan, Singapore and South Korea will be permitted to use e-gates at UK airports and at Eurostar terminals. The hope is that the move should significantly reduce queues, as well as improving the overall experience at the UK border.

“We can expect further changes to the immigration regime as we start to have more certainty over the Brexit outcome,” says Kingston Smith’s head of tax Tim Stovold. “In the meantime, these minor changes are intended to make the UK a more attractive place to carry out research and do business.”

Staffing body the Recruitment & Employment Confederation, which has expressed concern about skills shortages, says there is much more to do on immigration. But it sounds supportive of the government’s direction of travel.

The confederation said: “If we get skills changes right, UK competitiveness needs to be backed up with flexible immigration policies that meet our economy’s needs.

“There were some welcome steps today -- but the real test is an open approach to attracting people to work in the UK after Brexit. REC data shows that candidate availability has been falling month-on-month in the last year."

  • Digital Advertising Review (part of the ongoing ‘tech-lash’)

Philip Hammond used Spring Statement 2019 to announce his intention to ask the Competition and Markets Authority to undertake a market study of the digital advertising market “as soon as possible.”

“In and of itself, the chancellor referring the digital advertising market to the competition authority won’t take too many cents off the share prices of Google and Facebook,” reflected Hargreaves Lansdown.

“However it’s part of a global ‘tech-lash’ which has ramped up scrutiny on the practices of the tech giants, and is likely to lead to increased costs to improve practices on privacy, taxation, and content.”

The FSB said: “We look forward to inputting into the Competition and Markets Authority’s review of the digital landscape. Small firms must be supported to reap the full benefits of online platforms.” 

The instruction for the review coincides with the conclusion of another review -- by Professor Jason Furman, Barack Obama’s former chief economist, who has probed competition in the digital marketplace as a whole.

Published yesterday, Mr Hammond said Prof Furman’s recommendations were ‘far-reaching” and related to new powers for consumers and an overhaul of competition regulation, so that the UK’s regulatory model could be fit for the digital age.

With further implications for the digital sector, a consultation ahead of the introduction in April 2020 of the Digital Services Tax was reiterated by the government yesterday – the same day that the government itself was called by the House of Lords to establish a new Digital Authority to oversee the regulation of digital service providers and internet companies.

  • Broadband and Tech

The launch of a strategy for delivering a nationwide full fibre broadband network by 2033 was committed to in yesterday’s Spring Statement, as was a new ‘supercomputer’ to be hosted at Edinburgh University, “to maintain the UK’s technological edge.”

Final thoughts

Despite the riveting news of the super-computer, which Mr Hammond joked was so smart it could probably solve the dilemma of the ‘Irish back-stop,’ some advisers are still unmoved. Although they do sound like they understand why they feel underwhelmed.

Duncan Craze, senior financial planner at Contractor Wealth is one. He told FreelanceUK: “Given that the UK is going through what is arguably the most significant change to our future in hundreds of years -- Brexit, it really isn’t surprising that it was a fairly flat and unexciting statement.”   

The founder of app-maker Foundtech.ai, Nikolas Kairinos, seems to agree. “Dubbed by the chancellor himself as something of a ‘fiscal non-event,’…[his] speech was predictably short and light on meaningful announcements,” he said.

But the CIOT says it is actually rather pleased: “The absence of new tax measures in…[the] Spring Statement, [is] in line with the government’s commitment to holding just one fiscal event a year.”

The institute’s John Cullinane added: “Fiscally, today’s statement by the chancellor was a non-event. And that’s just what we wanted to see…[because] change is one of the greatest causes of complexity in the tax system.”

 

14th March 2019

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