Brooksonís reaction to the Budget

Martin Hesketh, MD of Brookson Ltd, comments on the Chancellorís Budget announcement: ìThis yearís Budget certainly wasnít one for contractors! The Governmentís promotion of flexible working seems at odds with the Chancellorís statements today, where he appears to be encouraging people back into permanent employment by increasing the corporation tax for small businesses, whilst lowering the income tax. He is also making it increasingly difficult for them to run their own businesses by clamping down on organisations designed to support them with administration, legal and accountancy matters.

ìAs expected, the managed service provider (MSC) legislation goes ahead and todayís announcement further underlined the Governmentís quest to tackle MSCs. However, with only two weeks until the end of the financial year, Gordon Brown has broadened the definition of an MSC. Having read the draft legislation, we will now meticulously go through it taking advice from Deloitte, liaising with the HM Treasury and HMRC to ensure we fully understand its implications.

ìHowever, on initial reading, itís clear that the definition of an MSC has changed significantly from the first draft. The main shift appears to be around the concept of an MSC provider being ëinvolvedí with a contractorís limited company - influencing or controlling the way in which it operates.

ìClearly, there will be a way in which businesses can compliantly provide support services to contractors, and over the next few weeks we will be developing our offering in line with this. We have been working closely with the HMRC for the past five years to provide compliant services for contractors to help take away some of the administrative burden of being self employed, and will continue to do so.

ìHowever, we do welcome the Chancellorís decision to listen to feedback from the industry regarding the transfer of debt issue and not include this in the current legislation, but postpone it until January 2008. This will give recruitment agencies, and other organisations potentially affected by the new rules, the chance to fully grasp its implications and ensure that they only work with compliant providers before it comes into effect.î